Manufactured and Modular vs. ‘Stick-Built’ Homes: Here Are My Thoughts

There has been some confusion in the real estate world over the term “manufactured” homes. Most recently the term has been applied to mobile homes — also referred to as single-wide or double-wide homes, which are transported fully finished to mobile home parks.

But “manufactured,” as I understand it, can be applied to a home whose walls, trusses and other components are put together in a warehouse, then shipped on flatbed trailers to a construction site where they are assembled and installed on a standard concrete foundation.

A “modular” home goes a step further, in that entire rooms might be assembled in a warehouse, transported to a work site and then assembled with other modules to make a complete house.

The first home I bought in Colorado was a ranch with walk-out basement in Golden’s Mesa Meadows subdivision. Only after I had moved in did a neighbor share with me how my home was put together in a day or two. Its components were manufactured in Fort Morgan and delivered to Golden only after the concrete foundation was ready to receive them. Anyone looking at the home would think it was a  “stick-built” home like the other homes in the neighborhood. When I bought it and when I later sold it, it wasn’t listed on the MLS as “manufactured,” because that would have felt like a misrepresentation, given the type of home it was.

The neighbor who explained that my home was actually built in Fort Morgan and assembled on site, explained how that process made for a better home. The exterior walls were 2×6 construction (to withstand the rigors of shipment) and they were fully insulated on the factory floor rather than on-site, resulting in better quality control. It made sense to me. It also made me wonder why more homes aren’t built that way.

I remember learning that an affiliate of Habitat for Humanity in Minnesota or Wisconsin constructs homes that way during the cold winter months — having volunteers assemble entire wall units in heated warehouses during cold spells, then delivering them to the site later on.

Every conventionally built home uses roof trusses that are made to order on factory floors and shipped to work sites on flatbed trailers, so why not have wall units made to order as well?

From 1933 to 1940 Sears Roebuck sold mail-order “Kit Homes” that were “pre-cut and fitted.” A 2-story colonial-style home called the “Martha Washington” was sold by Sears for $3,727. Other kit homes had names like the Cape Cod, the Ridgeland, the Franklin, the Dayton, and the Collingwood. See below for that model’s description from the Sears catalog. Many homes in Denver were built from Sears kits, but you’d never know it. Original owners of those homes are long gone, and the current owners of them probably have no idea.

There are definite economies to building homes that are “pre-cut” and partially pre-assembled off-site. For one thing, the factory workers can work every day regardless of the weather and even in multiple shifts. They can be more productive in a heated warehouse. There will be more efficient use of materials and more recycling and reuse as well.

Right now, the growing “tiny home” market is doing such construction and delivering modules or even entire homes to work sites, enjoying great economies in doing so. There is no reason that more elements of larger homes couldn’t be built off-site and delivered to construction sites for final assembly.

One example of off-site modular construction utilized in the building of sustainable homes is Structural Insulated Panels or “SIPs,” shown here.  Two sheets of sheathing have 4 to 5 inches of foam insulation between them. SIPs can replace walls built with wood framing and provide superior insulation.

Impresa Modular is a West Virginia company with a great website (www.ImpresaModular.com) describing the many kinds of off-site home construction methodologies they employ and sell.

There is so much innovation happening in home construction, much of which can not only reduce construction costs but can result in better insulated homes.

Here’s a picture of the manufactured home belonging to Butch Roberts of Salida, who sent the comment below:

Benefit From Knowing the ‘Realtor Advantage’

As you probably know, not all licensed real estate agents are “Realtors.” To be a Realtor, one has to be a dues-paying member of a local Realtor association, which automatically makes the agent a member of the state Realtor association and the National Association of Realtors (NAR).

Many low-producing real estate agents are reluctant to cough up roughly $500 per year in Realtor dues, so they join a non-Realtor brokerage like HomeSmart Realty in Greenwood Village or Trelora Colorado in downtown Denver. Agents with those firms can’t call themselves “Realtors.”

You’ve probably seen TV commercials by NAR saying “Make sure your agent is a Realtor.” Their current campaign features the theme, “That’s Who We R.” Both campaigns stress the point that only Realtors subscribe to the Realtor Code of Ethics. There is no code of ethics for non-Realtors.

In fact, however, violations of the Code, such as failure to disclose negative information about a listing or contacting another agent’s client directly, are also violations of state licensing laws. To me, the greater value of dealing with a Realtor like those of us at Golden Real Estate is our commitment to professionalism and to the industry, expressed in part by our willingness to pay those dues.

NAR’s lobbying on behalf of property rights benefits all agents as it does all property owners, and deserves the support of all licensees.

Saturday’s Electric Vehicle Roundup at Golden Real Estate Was a Big Success

Here’s a video Jim Smith took at 2:30 p.m. April3rd, when the parking lot at Golden Real Estate was already full. Among the cars you’ll see in this video are the Mustang Mach E, the Polestar 2 and the Jaguar I-Pace, along with the usual complement of Teslas (all 4 models), Chevy Bolts, Nissan Leafs and others. Enjoy!

Want to Get More Money for Your Home? Don’t Sell too Quickly!

I have written before that 4 days on the MLS is the right amount of time to get the highest price for your home. That was based on an analysis I did several years ago, so  it’s time to do a new analysis.

Looking at the 4,015 most recent sales in Jefferson County, here’s what I discovered.

Roughly 5% of those sales showed zero days on the MLS, meaning that they weren’t even exposed to agents or the public until they were under contract.  The median ratio of sold price to listing price for them was 100%. Some sold for over the listing price and some for less, but the median was the listing price.

Meanwhile, 200 homes went under contract after being on the MLS only 1 day.  The median home for this group sold for 3.03% over its listing price.

There were 379 homes that were active on the MLS for 2 days before going under contract. The median home in that group sold for 3.08% over its listing price.

502 homes went under contract after 3 days on the MLS. The median home in that group sold for 3.3% over its listing price.

The highest number of homes, 608, were active on the MLS for 4 days before going under contract.  The median home in that group sold for 3.6% over its listing price.

As in my prior analysis, being on the MLS for 4 days netted the highest price for the seller.

413 homes went under contract after 5 days on the MLS.  The median home is that group sold for 3.3% over its listing price.

Another 206 homes went under contract after 6 days on the MLS, but the median home in that group sold for just 1.6% over listing price.

Skipping ahead to the homes that were on the MLS for 10 days before going under contract, the median home in that group sold for 0.4% below the listing price.

Those statistics are displayed graphically on the chart above. Not shown in that chart is how low the ratio of sold price to listing price went for homes that languished on the market, usually because they were overpriced at the beginning. Here’s that other data:

223 homes were active on the MLS for 30 to 45 days before going under contract, and the median home in that group sold for 3.8% below the listing price. Looking at the 106 homes that were active on the MLS for 46 to 60 days, the median home in that group sold for 4.3% below listing price.

Lastly, 285 homes were active on the MLS for over two months. The median home in that group sold for 5.7% below the listing price.

The lesson for sellers is that you need to price your home to attract multiple offers and not accept the first (or second) good offer that you receive. Four days is the right amount of time, with proper marketing, for all potential buyers to learn about your home and enter the competition for it.

Selling it without making it active on the MLS at all, as too many sellers are currently doing, may be convenient, but it likely leaves money on the table.

There’s another way that sellers leave money on the table, and that is to hire a listing agent who uses the “highest and best” approach to handling multiple offers. It is the most common method used, but the agents of Golden Real Estate use a better approach — being open and transparent, handling bids auction-style.

The auction style of handling multiple offers is simple, but it does require more work by the agent and more patience on the part of the seller. Buyers and their agents appreciate this approach — and sellers are likely to net more money.

I have a good example from last week. I listed a home for $595,000 and got it under contract for $725,000, and I did it with only four bidders. If I had asked for “highest and best,” I would have had many more offers, and maybe the highest and best would have been $625,000 or maybe $650,000. But because I let every agent know the details of every offer I received, I received fewer offers, and those I did receive knew when their offer was exceeded by another offer. At that point they could either resubmit or drop out.

This process truly resembles a public auction, in which everyone knows where they stand and can choose to raise their bid or drop out. No one is blindsided. The worst thing for a buyer is to discover later that if they had only offered a little more money they could have purchased the home they wanted.

It’s hard for me to understand why listing agents won’t reveal their highest offer to other agents. There is no rule against it, but some agents seem to think there is. Some agents claim that their seller doesn’t want them to reveal details of the offers in hand, but I don’t believe that. And if it’s true, then the seller wasn’t told about the advantages of the auction style of managing offers.

If you want to get the most money for your home, use an agent like those of us at Golden Real Estate who are willing to do the extra work of handling multiple offers auction-style.

‘Deed’ or ‘Title’ — Homeowners Are Confused About Ownership Instruments

You can blame “Monopoly” for some of the confusion. That board game taught us all that there is such as thing as a “deed” to a property. With a “deed” to Boardwalk and some houses or a hotel on it, you could charge rent to those who landed on it — and hopefully win the game.

Meanwhile, the Department of Motor Vehicles has taught us that there is such a thing as a “title.” Meanwhile, when you purchase a home, you receive a “title policy” which guarantees “clear title” to your property.

But surprise! There is no such document as a “title” to your home the way there is a title to your car. There is a document called a “deed” but that is the document which transfers ownership, it is not proof of ownership. Sorry, I know this is confusing!

So where is the proof that you own your home? It is held by the Clerk & Recorder of your county, and it’s based on the most recent deed recorded with the county. The only proof that Rita and I own our home in Golden is that the most recently recorded deed transferred the property to us. There is no other document which we have or can produce to prove we own our home.

Last year the state-mandated contract for the purchase and sale of real property changed the way deeds are specified. The agent preparing the contract specifies whether the buyer wants to obtain ownership through one of several deeds.

First is the “Special Warranty Deed,” by which the seller warrants that he is transferring ownership of his property free of any known lien or claim of ownership during the time he/she or they owned the property. That is the most limited type of deed.

The buyer might, however, demand a “General Warranty Deed,” by which the seller is warranting that there is no other claim of ownership (or lien against the property) going back to the beginning of time. 

What you need to know, however, is that, regardless of which type of deed is used to transfer ownership, the buyer should receive an “owner’s title policy” (typically paid for by the seller) guaranteeing free and clear title to the buyer. In other words, it hardly matters which type of deed is used to transfer the property. You’re still protected.

Title insurance differs from other kinds of insurance because it has no term. It is a one-time purchase that covers the new owner of the property forever. It never has to be renewed.

Prior to issuing the title policy, the title company does a “title search” looking for any recorded claim of ownership or lien against the property in question. If a claim or lien is not recorded with the county in which the property is located, it can’t be enforced.

It is possible, of course, that a claim or lien might be overlooked during the title search, but it’s pretty rare. I recall once in 1991 I purchased an older (1905) office building in Denver, receiving a title policy from Land Title Guaranty Company. Within a year or so, I was notified of a lis pendens against the property, but the lawyers for Land Title did whatever they had to do in order to clear it, costing me nothing. Since that time I can’t think of any claims against any title policy held by me or any of my clients — and I’ve had quite a few!

There are other types of deeds beside Special Warranty and General Warranty. If the property is owned by the estate of a deceased person, the property is transferred by a “Personal Representative’s Deed.”  If the property is purchased at a foreclosure auction, it is transferred by a “Public Trustee’s Deed.” If a property is purchased out of bankruptcy, it is transferred via a “Trustee’s Deed.” 

A “Quit Claim Deed” is used when real estate is transferred without being sold for money.  For example, if John Doe were to marry Jane Doe and wanted to put a home he owned in both their names, he could “quit claim” it from John Doe (as “grantor”) to John & Jane Doe (as “grantees”). If they divorce later on, John & Jane Doe might quit claim the house to either John or Jane, with or without a monetary settlement on the side.

With such examples, I hope you now understand that a “deed” is in fact an instrument of transfer, and not a title to property.

Because there is no physical title to real estate, the first thing that a title company does when asked to execute a contract to sell a parcel of real estate is to issue a “title commitment,” which is a document asserting who the recorded owner of the property is and to whom it is to be transferred.

There is one other use of the word “deed,” and that’s for the “Deed of Trust” which a mortgage or other lender has you sign when you take out a loan of any kind which is secured by your home. That document is recorded with the County Clerk & Recorder and is the basis for that official to hold a foreclosure auction if you default on the loan.

I am not a lawyer, and I am providing this information as I understand it from real estate classes and from my experience as a real estate licensee. You’ll want to engage a lawyer if you require further explanation, and I, like any real estate licensee, can refer you to one.

Here’s a Postscript to My Earlier Post About All-Electric Homes

Some readers were surprised to read my column promoting the all-electric home as a cost-effective contribution to the mitigation of climate change.

If you’re thinking of 20th Century home construction, promoting the all-electric home would make little sense. Electric baseboard heating has its place, but no longer as a whole house solution. One advantage of it is that each room can have its own thermostat, so you’re only heating rooms when you use them. For the heat it produces, however, it is many times more expensive than using a mini-split heat pump solution. Recently I showed a home where a heat pump mini-split was used to heat a detached and insulated garage which doubled as a workshop. That’s a great application for that kind of heating — also because the mini-split can cool the garage in the summer, not just heat it in the winter.

There has been a revolution in the development of electric appliances, too. The induction cooktop, for example, is a highly efficient replacement for earlier electric ranges or cooktops which used resistance-based cooking elements.

Another change from the 20th Century: you can now generate your own electricity with highly affordable roof-top solar photovoltaic installations.

Help Us Find a Denver Home for Our Wheelchair-Bound Buyer!

NIck and Barb Fowler

We have a wheelchair-bound buyer looking to purchase a home in the East Denver/Aurora area. Call Jim Smith at 303-525-1851 if you can help us find a ranch-style home that is already accessible or could be made accessible. Thank you!

Just Listed: 2-Bedroom Condo in Downtown Golden

Washington Station, at 722 Washington Avenue on the corner of 8th Street, is a mixed use building, with businesses on the ground floor and part of the 2nd floor, with secure residences on the rest of the 2nd floor and the 3rd floor. This unit, #302, comes with 2 parking spaces in the ground-level garage. It has newly installed carpeting and engineered hardwood floors. The kitchen, which is open to the living room/dining room, features slab granite countertops, stainless steel appliances, a breakfast bar, and the same hardwood flooring. You’ll enjoy the mountain views from the living room windows and the 6’x11’ balcony overlooking Church ditch. A storage closet in the unit is big enough to hold bicycles, skis, snowboard, a kayak, etc. Take a narrated video tour online at www.GoldenCondo.info, then call your agent or Jim Smith at 303-525-1851 to see it!

Slab granite countertops, breakfast bar and hardwood floor in kitchen
Kitchen is open to dining room/living room with hardwood floor
Mountain view from dining room/living room window
6’x11′ balcony overlooks Church Ditch, with view of North Table Mountain
Two deeded parking spaces in ground floor garage are included

Zillow’s Offer to Buy Your Home for Its ‘Zestimate’ Price Is a Brilliant But Devious Strategy

I’ve written in the past about various “iBuyer” players — look for my August 22, 2019, and January 2, 2020, columns archived online at www.JimSmithColumns. com.

Basically, iBuyers such as Opendoor and Zillow Offers attempt to lure homeowners in-to selling their home for what appears to be a good price but which is literally intended to net the seller less than if they exposed their home to the full universe of potential buyers.

Literally intended? Yes, all you need to know is that if a company wants to buy your home in order to resell it, it’s because they will make a profit from doing so. Wouldn’t  you want to keep that profit for yourself?

Now Zillow has weaponized its much criticized “Zestimate” for the purpose of getting their “foot in the door” with you. Let me share with you a few points to ponder before responding to Zillow’s pitch.

First of all, you and I both know that the Zestimate is a computer-generated number that is by definition not particularly accurate. (Zillow’s estimate on my own home is at least $100,000 over its true value.)

To facilitate their iBuyer program in Colorado and elsewhere, Zillow made big news recently when they opened brokerages and started hiring brokers. They have opened an office in Centennial and, as of this week, have 15 broker associates, 12 of them members of the Denver Metro Association of Realtors. The others belong to an out-of-state Realtor association.  So far that brokerage has put zero listings on REcolorado, our MLS, whether active, pending or closed. Presumably those 15 broker associates are busy responding to homeowners who responded to Zillow’s pitch about buying their home for the Zestimate price. How will those meetings go?

First, the broker associate will do a true market analysis and explain that the Zestimate was computer generated and overstated their home’s value. “Here’s what we will offer you, now that we know the true value.”

If the seller accepts the lowered price and signs a Zillow purchase contract, it will have the following provisions, assuming it’s similar to the contract from Opendoor that I was able to study.

First of all, the seller will have accepted a 7½% “service fee” in lieu of a commission. Next, they will have agreed to an inspection or  “assessment” of the property, which will be followed by “adjustments” to the purchase price based on “needed repairs,” including, for example, a new roof, a new furnace or water heater based on age — whatever can be justified. The example I cited in my August 2019 column mentioned $38,563 worth of “repairs found in assessment.” 

That contract had an escape clause for the seller, which Zillow’s contract probably does too, allowing the seller to terminate at any time, which is what that buyer did.  The combination of the “service fee” and the reductions to cover supposed “repairs” was so great that they called me. I listed their home for the right price and sold it above asking price due to multiple offers, netting the seller more than they would have netted under their contract with Opendoor.

I got the seller more money, because, as I said above, the only reason for Opendoor or any iBuyer to purchase a home is to sell it at the market, which requires them to purchase the home below its market value.

In the iBuyer marketplace, Zillow clearly has the advantage, because virtually every homeowner is already being dazzled by the Zestimates they get routinely by email, whereas Opendoor and other iBuyer competitors have to canvass and cold-cold homeowners about selling their home “without putting it on the market or paying a commission.”  Zillow enjoys what every brokerage wants — sellers calling them! All the Zillow brokerage has to do is employ enough agents to answer the phone and arrange those in-home “selling” appointments, which are really for the purpose of listing the home for sale once it is owned by Zillow.

It’s a great business model — for Zillow, but not necessarily for the homeowner. That is, unless the homeowner is willing to give up thousands of dollars in proceeds in return for the “convenience” of selling without any showings or other intrusions.

For some homeowners, that convenience is worth the loss of proceeds, and there are probably enough such homeowners to make the iBuyer model successful. What bothers me is that for some it will feel like a “bait and switch” situation. After all those “adjustments” have been made, they might be un-able or unwilling to exercise their right to terminate the contract because they have made life plans based on the expectation of selling their home for an acceptable price. 

Some will have already signed contracts for a new home or at a senior community. They will have already packed some of their belongings or put them in storage, and they may have told their friends that they are selling and moving. For these persons, it may be psychologically difficult or financially costly to reverse course when they discover they have been fooled into selling their home for less than its worth.

If you have responded to the Zillow pitch and would be willing to share your experience, I’d like to hear from you. My email address is Jim@GoldenRealEstate.com.  I’ll share what I learn in a future column.  Subscribe to this blog to get alerts about future postings on this or another topic of interest.

Updated 4-BR North Golden Bungalow with 2-Car Garage

1110 5th Street – Just listed at $595,000

This 1940 bungalow at 1110 5th Street is a short walk from downtown Golden, Clear Creek, a city park and numerous hiking and biking trails on the hills and mountains that encircle downtown Golden. The home has been beautifully updated, with a kitchen that is open to the living room and dining room. There are two bedrooms and a full bathroom on the main floor, plus two more bedrooms and a 3/4 bath in the basement. Unlike many Golden bungalows, this one has a detached 2-car garage with an electrical subpanel and water that is accessed from an alley behind the home. You’ll also appreciate the established low-water gardens. Find lots of pictures and a narrated video tour at www.NorthGoldenHome.com, then call your agent or Jim Smith at 303-525-1851 to see it in person. We’ll have an open house this Saturday, March 20th, 11-1.

Kitchen – all appliances are included!
Dining room has gas fireplace and door to covered patio
Living room
Primary bedroom with hardwood floor, ceiling fan and windows facing front & side yards.
West-facing covered patio with sun screens. Picnic table is included.
Backyard and Oversized 2-Car Garage