by Suzanne Staton    What does the new legislation, which went into effect Sept. 1, 1999, mean for REALTORS®? And how is selling a manufactured home different from selling a site-built home? There are several differences that REALTORS® should be aware of.

Big business
In the last few years, manufactured housing has accounted for more than 30% of all new single-family home sales in Texas, according to the Texas Manufactured Housing Association. With 45,277 shipments in 1998, Texas was listed by the Manufactured Housing Institute as the top state for manufactured home shipments. Add these new shipments to all the manufactured homes currently on the market, and that means there are a lot of manufactured homes out there.

In the past, real estate brokers were allowed to broker the sale of only one manufactured home per year unless the title of the home was canceled or merged into the title of the underlying land. This effectively cut licensed Texas real estate agents out of the manufactured-housing market. Amendments to the Texas Manufactured Housing Standards Act passed last year (HB 1193 and HB 2238) have changed that.

Getting a piece of the action
Now, licensed real estate brokers may broker the sale of a manufactured home as long as the broker is otherwise performing real estate brokerage services for one of the parties. This means that if a REALTOR® already is assisting a client in the sale or purchase of real property, and the client also has a manufactured home that he would like to buy or sell, the REALTOR® may assist the client with the sale of the manufactured home in addition to the other transaction.

Licensees are not limited in the number of these types of manufactured-housing transactions they may assist with. An example of this type of transaction, according to TAR Director of Legal Affairs Ron Walker, would be if a client owned real property with a manufactured home located on it, and a REALTOR® listed the property for sale. The salesperson could also assist with the sale of the manufactured home to either the buyer of the real property or to a third party without fear of violating the Manufactured Housing Standards Act.

What you can't do
A salesperson may not, however, broker an unlimited number of manufactured-housing sales when the manufactured home is the only property he or she is assisting with. Licensees are still limited to only one transaction of that type per year, unless they register with the Texas Department of Housing and Community Affairs (TDHCA) as a manufactured-housing broker. TDHCA is the state agency charged with enforcing the Texas Manufactured Housing Standards Act.

Names matter
So now that REALTORS® can participate in these types of negotiations, what should they know about manufactured housing? For one thing, know what to call it. "Know your definitions," says Scott Allison of Scott Allison Real Estate in San Angelo. Allison is the chair of the TAR Manufactured Housing Task Force, and he says one of the most important issues for REALTORS® is to know the difference between mobile homes, manufactured houses, and modular houses.

Mobile homes were housing units built prior to 1975 that were constructed on wheels and could travel. The quality of these units was noticeably inferior to "stick-built," or site-built homes that were permanently attached to the land underneath.

Manufactured homes are housing units built after 1975 that can travel to a location to be sited. These units are built to the specifications of the Department of Housing and Urban Development’s Federal Manufactured Home Construction and Safety Standards, and are of superior quality than their predecessor, mobile homes.

Modular homes are houses that have pieces constructed off-site, such as walls, and then the pieces are transported to the site where the home will be located. The home is then assembled on-site.

Real or personal?
Another important consideration specific to manufactured homes is whether a particular home is considered real property or personal property. If a manufactured home is affixed to a permanent foundation and has the title or manufacturer's certificate canceled, the home is considered real property. When this is the case, a REALTOR® may participate in a transaction involving the home without registering with TDHCA or being concerned about violating the Texas Manufactured Housing Standards Act. The REALTOR®'s real estate license is sufficient.

If a manufactured home is not permanently attached or the manufacturer's certificate or document of title has not been canceled, the home is considered personal property. In these cases, the REALTOR® either will need to be performing sales services for the client involved in the transaction already, or will need to make sure that he has not negotiated a sale of this type in the last 12 months.

Financing is affected
A home's status as real or personal property also affects the kind of financing available. If a home is considered real property, the unit is eligible for home mortgage financing like a site-built home. If the home is considered personal property, personal property financing, also known as a chattel mortgage, must be used.

If a manufactured home is permanently attached but the title has not been canceled and the owner of the home would like to do so, they may do so by completing the procedures required by TDHCA for surrendering a title. The sale may then proceed as a real property transaction. The instructions for surrendering/canceling a title are available from TDHCA by calling 800/500-7074, or can be downloaded from www.tdhca.state.tx.us/ pdf/surrend.pdf.

Where to?
An issue that comes up more often for manufactured homes than for site-built homes is where to site the home. The three main options are on an individual land plot, in a traditional manufactured home community, or in a manufactured- home subdivision. Most manufactured homes are located on an individual plot of land (58% in 1996). Homeowners either rent or purchase the lot. In this case, the REALTOR® may be called upon to help the homeowner purchase a site for the home as well as negotiate the sale of the home.

Traditional manufactured home communities, formerly called mobile home parks, are the second most popular option (34%). Homeowners in these communities simply rent the lot where the home will be located.

The third option is the manufactured home subdivision. In a subdivision, sites are developed specifically for manufactured homes and are ready for installation, but homeowners must purchase lots instead of leasing them. These communities are relatively new and closely resemble site-built subdivisions. Like an individual plot, siting in a subdivision involves the purchase of real property.

Know your limitations
If deed restrictions apply to your client's chosen site, make sure the client gets a copy of the restrictions, warns Allison. Some neighborhoods have age requirements for the homes they allow to be sited; others may only allow double-wides, etc. Also, REALTORS® should help client's prepare for the extra costs of setting up their new home, such as installation of the home, installation of a septic system, or building a pad. The Real Estate Center at Texas A&M University offers a Manufactured Home Buyer's Guide that can help buyers estimate their costs.

Sprucing up
The biggest draw of a manufactured home is price, but the biggest challenge can be perception. With an average sale price of $42,450 (not including land), these homes tend to be more affordable than site-built homes, which posted an average price in Texas of $134,600 (including land) in November 1999. This has often led to a concern that manufactured homes have inferior quality.

According to the Real Estate Center, however, recent studies indicate that the difference in durability and value retention is slight, as long as the manufactured home is permanently affixed. Furthermore, today's manufactured homes are more upscale than old-style mobile homes. Today's homes are often multisectional and come with amenities such as vinyl siding instead of aluminum, skylights, attached garages, and porches. Some models are even two-story, and price tags can range into six figures.

A good year
Some recent reports indicated that an overstock of inventory for new units would make at least the first part of 2000 a slow market for manufactured housing, but Sam Russell of the Texas Manufactured Housing Association says those predictions are not being borne out. "The word from retailers is that sales are good this year," Russell says. "During late summer and fall [of last year] there was an overstock," he says, but sales now appear to have caught up with inventories.

So, what's the bottom line? With even more manufactured homes on their way to sites around Texas, it's a good year to tap into a booming market.

Suzanne Staton is the assistant editor for TAR. E-mail her at sstaton@tar.org

back to top