I am finding my sales of new m/h homes now depend more on selling value than price. Is this a trend?
Jane W., Columbus OH
Yes. Modular/manufactured home sales now are almost completely focused on the home quality and not so much on price.
As the m/h industry has progressed since the early 40’s when travel trailers evolved into long single section and eventually multi-section homes were sold, low price and afford ability were the primary motivation of the buyer. So the industry responded with homes which were initially lower quality, and after construction standards were imposed after the Federal Housing Act of 1974, Federal standards applied to homes, guaranteeing the public a measure of quality and safety. Still, with a few notable exceptions by manufacturers who built “high end” homes primarily for the retirement segment, the industry concentrated on low cost and affordability.
When these factory homes built to the new HUD Codes were placed in mobile home parks, eventually re-named land lease communities, at medium densities for lower home site development costs in combination with lot rents, and viable home financing terms, m/h were popular in many parts of the country. However, with the demise of the chattel home financing programs in the early 2000s, few homes were sold into land lease communities, and most retailers turned their efforts to selling homes in land-home packages in rural markets with low interest long terms loans, primarily the FHA 203B loan guarantee programs.
M/H community developers began to sell homes from within their new communities to offset high land and construction costs. Today, it is rare to find a boulevard retailer who regularly sells homes into land lease communities. And boulevard retailers lost their interest in selling buyers in paying rent for their home sites in a land lease community when they could “own” their land-home with low interest, long term financing rates and terms.
In many Southern and Mid-West markets sales of m/h using a combination of chattel mortgage financing and seller financed home sites were popular until a number of states found the practice to be irregular, and sometimes illegal. This practice has all but disappeared today. And, many of the problems with the chattel mortgage firms demise can be traced to this practice.
Still, in many rural markets where zoning and land use regulations will allow it, retailers still sell single section and smaller multi section homes at affordable home prices. This is a practice which continues where land costs and associated costs for potable water and septic systems installations are still relatively inexpensive. In those markets, selling m/h superior quality and value is not yet a major factor, but is beginning to increase.
In rural markets, it readily became evident that their primary competition was the custom site built home builder, who often built entry level priced homes in rural markets with “bare bones” features. Retailers began to compete with home features, rather than price alone. In most cased the m/h product was superior in the use of materials, workmanship, and overall quality. Value became the most important sales approach, and lower cost housing fell to the background.
It has become important for many retailers to distance themselves from the negative, albeit undeserved, reputation of HUD Code homes, and have either eliminated all homes from their sales centers except for the modular homes, or opened entirely new sales locations, only featuring new modular housing. As this shift is happening, a totally different type of retail sales center is emerging, one in which the home buyer has come to expect professional assistance in all aspects of the home purchase: selecting the home, obtaining long term low interest financing, general contracting for the home installation, and after market services.
Sales staffs are now more professionally trained to help the home buyer understand home construction standards, select their floor plan, customize the home when appropriate, obtain the best financing sources, schedule and coordinate foundation and home installation, hookup the utilities, and provide for the after sales service and warranty work.
Now with many of the retailers selling modular homes, home buyers are finding home features and workmanship are of superior quality, and most sales operations have begun to capitalize on this approach. Though often the modular home in a land-home configuration in a rural market will be less expensive than a site built custom home, home buyers are keenly aware of it’s better value, quality and fine workmanship.
A number of more progressive home factories are now taking over the home installation, after the retailer has built the foundation system, and often will complete any finish work which may be required. So, the retailer sells, finances, and performs service and warranty work on the home, but has minimal involvement in the construction or installation.
Modular/manufactured housing advertising and marketing themes oriented around quality and workmanship features is beginning to pick up on this, as retailers around the country recognize what home buyers are looking for. Although sometimes lacking in configuration alternatives because of the over the road transportation imposed limitations, today’s modern modular factory built homes are recognized as superior in most cases to entry level site built homes.
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