Service Plan for Manufactured Housing

 Have you ever considered the value of maintaining a relationship with your customers after the installation or sale of the home? A relationship that would be profitable for you while providing an important service to the folks living in manufactured homes? Maybe it is time to consider a long-term service plan where you help your customers with their routine maintenance, and potentially identify and address small problems before they become big problems.

Service plans are very common in many other industries. Look at this advertisement I received from a local HVAC company.

This HVAC company offers a 10% discount on necessary repairs as an incentive to participate in their Service Plan

I know people that have long-term service plans with their electricians, plumbers, exterminators, and landscapers to name a few.  There is no reason that the manufactured housing industry can’t offer this same option to customers. While very few manufactured housing industry professionals have been offering service plans, the ones that do claim that it is a good source of income, and it also had a great impact on customer relations and the overall performance of the manufactured home!

I believe there are two important tools that retailers or professional installers must use in order to establish a smart, effective and profitable service plan or agreement with their customers:

1.       A legal contract outlining the overall plan, the limitations and the expectations.

2.       A written checklist to direct and document the inspection process that is the basis for the service plan.

I did a little research on this, and found that there are several service agreement templates available on the web. Just search for “service agreement templates”. Look these over to get an idea of how a service plan could be drafted. Or if you prefer, talk to a lawyer.

One of several templates found on the internet.

The scope of work for a service plan should be extracted from the Installation Checklist that you already are completing (I hope), and the homeowner’s manual that is provided with every home.  The contract should clearly state what elements of maintenance are covered under the service plan, which elements require an additional charge, and what may be totally beyond the capabilities of the agreement.

A leaking P-Trap resulted in a belly filled with water. A routine service plan could have found this problem when it was still just a drip!

Ultimately, you would give the home an “annual check-up” and document anything that might have a negative impact on the durability and overall performance of the home. For example, you would check for holes in the bottom board. Look over the piers, are there loose shims or cracked blocks? How about the anchoring system? Are there loose anchor straps or components?  Inspect the rain gutters and downspouts. Are splash blocks in place? Does the water drain away from the house? Are the roof penetrations sealed? Do the furnace filters need changed? Do the bath and kitchen exhaust fans work? Is the dryer vent clear? Are the P-Traps tight? Is the heat tape in place and properly installed? Test the smoke alarms and change the batteries. I think you get the idea.

Have a checklist to keep things well documented.

Keep in mind, a typical service plan is limited to addressing the basic maintenance requirements that every homeowner is expected to perform. The difference is that you would provide this service for your customers for a fee. As is always the case, should you were to run across any code related defects, you should report the issue to the manufacturer and document the reporting.  

I personally believe that the reputation of the manufactured housing industry is directly tied to the relationship (or lack of relationship) that we have with our customers after the sale/installation is completed. Maybe service plans can be a step towards improving our reputation, while helping the homes reach its’ full potential as not only affordable, but high quality, safe and durable housing.

Manufactured Housing-Different From The Rest

I recently was contacted by a real estate appraisal company from Michigan that was in a heated dispute with a property owner regarding their factory-built home. Was it a modular home or a manufactured home? The homeowner claimed is was a modular, while the appraiser disagreed.

A steel chassis does NOT always mean it is a manufactured home.

This appraisal company had over 30 years experience, yet had never received any training specifically on manufactured housing. Most training courses will include a few slides that basically say that if a home has steel chassis (or frame) attached to the floor joist, it must be a manufactured home. As you know, that is not always the case. 

Now, don’t think I am criticizing real estate appraisers. I have seen tax assessors make the same mistake. In fact, not just appraisers and assessors, but code officials, zoning officers, banks and home inspectors as well. This leads me to ask, why are so many housing professionals misinformed regarding manufactured housing? 

I visited several web sites to see what they say regarding the differences between manufactured and modular housing, and found most of the information on the web is more focused on marketing as opposed to structural features and building code differences. To make things worse, too many industry professionals do not have a clear understanding of the differences, and play fast and loose with the terms manufactured, mobile, modular, etc., causing further confusion.

Now, to muddy the water even more, we are dealing with “tiny houses” which are a completely different product! Why do they use the word “house”? Calling them “Tiny Campers” would be more accurate. But, as it stands they also add to the confusion. 

A tiny home is not a Manufactured Home!

So, what is so different about a manufactured home compared to other housing? And who should be responsible to assure that manufactured homes are not confused with other housing types? And does it even matter?

Simply put, modular homes are generally built to a state specific building code and are not intended to be moved after the initial installation.  They are considered real estate and must be placed on a permanent foundation on privately owned land. And like it or not, some producers design and construct modular homes that leave a chassis in place, even after it is placed upon the foundation. But the intent is that the modular home will never be moved after placement.

As you know,  manufactured homes are built to a national building code. However each state has their own set of requirements (or lack of requirements) regarding assesment, classification, zoning, lending, sales, etc. Many states consider manufactured homes to be vehicles, registered or titled through the state Department of Motor Vechicles (DMV). Therefore, like a “vehicle”, manufactured homes are considered “personal property”. Which means instead of a low interest rate mortgage, purchasers must either pay cash or take out a high interest rate “chattel” loan.  

This home on private land will likely never be relocated.

So why are manufactured homes considered vehicles? Because by definition, a manufactured home must be permanently transportable. It doesn’t matter if the home is placed on a full basement, masonry crawl space, piers or slabs. A manufactured home must retain the ability to be moved from one location to the next. It may not always be practical, but the on-going ability to lift the home from the foundation, re-attach tires and axles, hitch and lights for transport is required.

For a manufactured home installed in a leased land community (park), a chattel loan makes sense. But today, many manufactured homes are placed on private land with permanent foundations. For these situations, a chattel loan is not the best option.  The owner of the manufactured home would have to work with their state DMV to retire the registration or title and establish the home as “real” property, and therefore qualify for a mortgage.

I hope this helps you better understand the mortgage/chattel loan issue. Banks are reluctant to lend money to a structure that could potentially be towed from the building site.

So, can you blame an appraiser who looks in the crawl space and sees a steel chassis and assumes it is a manufactured home?  

I don’t presume to have all of the answers to this decades old problem, but I do think that understanding the requirement of transportability is important. I also believe that there are some simple steps that all of us can take to help educate those in the housing industry as well as the home buying public:

  • Use the correct terminology. If it is a Manufactured Home, call it a Manufactured Home!
  • Earn the confidence of other housing professionals. Start sharing how this program is regulated, and that there is oversight to protect the consumer and the public.
  • Consider sponsoring a training session in your area for code officials, assessors, appraisers, or other housing professionals.
  • Teach the consumer that at some point the home’s label and data plate will be important and should be preserved.
  • Invite housing officials to your trade show, retail center, or to visit an installation site.
  • Become your area’s manufactured housing expert. 

The Manufactured Housing Program is likely the best kept secret in the housing industry. To encourage the industry to grow, we need to get the rest of the housing industry to better understand what makes our product different.