How To Negotiate On Price For A Modular Home

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You can negotiate the overall price of a modular home mainly by modifying the design or customization choices. Despite it being common to refer to acquiring a modular home as buying a modular home, it is more accurate to describe it as building a modular home. Therefore in general, we don’t negotiate a final price but instead adjust our choices, because the overall cost of building a modular home results from a complex quota that varies depending on multiple factors. 

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Main factors to consider when cutting down the cost of modular construction:

  • Lot cost
  • Access to the lot
  • The size of the house
  • Customization
  • Distance from the manufacturer to the building site
  • Manufacturer’s specialty

Understanding those aspects that impact the overall price of the construction is the most effective way to identify where to reduce the costs and obtain a lower modular home price. We should never try to negotiate or lower the overall modular home price without defining where to cut down since this could easily translate into a lower-quality product that is not suited to our needs.

Is there a dealer markup on modular homes?

There is no dealer’s markup on the finished modular home’s price. The dealer markup is a common practice in manufactured home trading: buying a manufactured home resembles the purchase of a vehicle where the cost of the house is usually raised by the dealer usually based on local demand [1]. Acquiring a modular home however, follows quite a different process: you don’t buy a house from a dealer, you build a house with a contractor.

It is common when buying a manufactured home to negotiate the price reducing the dealer’s markup, though this practice doesn’t apply to modular homes. Modular home manufacturers, like any other builder, add the equivalent of markup on every material purchased to build the home which is known as a profit margin. However, this is usually not subject to negotiation since this percentage is a standard practice used in construction to cover the costs of the company.

Factors to consider when lowering the overall modular home price

Lot Cost

If you consider buying a lot together with the modular home, reducing its cost will nicely reduce the total amount. Moreover, you should know that it is possible to negotiate the price of the land with your real estate agent. However, the cost of the land goes beyond the initial purchase price since when considering a lot aspects such as the lack of access to the basic utilities could account for a significant price increase such as its.

Every house needs access to fresh water, electricity, and sewage systems. Acquiring a lot that is already supplied with public utilities is the smartest option to keep the prices as low as possible. Those lands without access to public utilities will need to either build those connections or install private septic systems and fresh water supplies by building a well or a deposit [2], which will highly elevate the overall modular home cost.

Access to the lot

Choosing a lot with proper access is key to avoiding extra costs, the transportation of the modules from the factory to the building site is done with a flatbed truck, and given its substantial dimensions, it requires practicable road access. If the plot counts with difficult access by road, this inconvenience will have to be solved either by enlarging the road access [3] or by opting for a different transportation vehicle such as a helicopter [4]. In case we already own a lot which access is, unfortunately, limiting for modular home construction, carefully analyzing all the possible alternatives will grant us the opportunity to choose the most affordable one.

The size of the house

This might sound obvious, but the bigger the house the more it will cost. Yet with modular construction, the extra cost of adding an extra room or building a bigger home doesn’t only come from adding materials and labor time, but it often translates into increasing the number of modules which represents extra trucks and transportation needs. 

Customization

Opting to build a house out of a predesigned floor plan is often the most economic choice. Most modular home manufacturers offer the possibility to highly customize a predesigned modular home or even design it all from scratch. Though any customization or add-ons will automatically increase the initial cost. When trying to identify possible elements to cut down the price look at the selection of finishing materials, appliances, any special features, or even the type and number of windows; and identify if there is an element that could be eliminated or downgraded.

Also, another element that often increases the total cost is the addition of details or appliances. Given that modular home manufacturers add a percentage on every good they purchase to cover the expenses these works represent for the company, often adding those elements afterward could be a cheaper choice. Still, do not rush into this decision without comparing the prices by yourself, since in some cases the modular home company has access to special deals by supplying all the devices.

Distance from the manufacturer to the building site

To ensure a better price deal, choose a manufacturer based nearby the lot where the modular home will be built. Modular homes are built in a factory, though once every module’s construction is finished, they are delivered to the building site to be assembled. The distance between the manufacturing plant and the building site is an important factor to consider when analyzing the overall cost of building a modular home, since the longer the distance, the higher the transportation cost.

Manufacturer’s specialty

Since modular construction follows a process that is quite industrialized, every manufacturer usually focuses on a set of priorities. Some manufacturers specialize in sustainable design, some in modern-looking houses, and others in simplifying the construction process. Choosing a manufacturer that specializes in those aspects we prioritize is a guarantee that the money we invest in the house is intended to suit our needs.

For example, if energy efficiency isn’t a priority for us, choosing a modular home manufacturer focused on it could translate into an unnecessary extra cost. Though this applies to the opposite as well, asking a manufacturer to offer a feature that isn’t standardized can highly increase the overall cost.

How to cut down the modular home cost

To reduce the initial cost of building a modular home it is essential to understand which factors directly impact the overall modular home price. Once we are aware of those, identifying which choices are priorities and which we can renounce, is an easier task.

  • Buying land to build a modular home: When buying land together with a modular home, look for an affordable price and negotiate its value. Whenever possible, choose a lot that can be easily reached by a flatbed truck and with access to public utilities.
  • Adapting the size and design of the house: Take some time to define the space you need, identify how many rooms you really need, and try to reduce non-necessary spaces if that represents reducing one module. Also,if possible choose a predesigned floor plan to save the design and personalization costs and avoid incorporating details or appliances if you could acquire them at a more affordable price. 
  • Choosing the right manufacturer: Choosing the right manufacturer is essential to avoid unnecessary costs. Look for a modular home company that manufactures the modules nearby your lot while specializing in those aspects that are priorities to you.

References

  1. Henry, S. (2005, January 27) Study finds significant fluctuations in costs of identical mobile homes CR Consumer Reportshttps://advocacy.consumerreports.org/press_release/study-finds-significant-fluctuations-in-costs-of-identical-mobile-homes/
  2. Andrew Gianino The Modular Home Storey Publishing, LLC (2005, February 15) 
  3. Standard Unit Geometrics Section Traffic and Safety Division (1969 May) Turning Path Determination Procedure. A study to verify Predicted Turning Paths  TSD-G-115-69 Traffic and Safety Division. Michigan Department of State Highways LANSING https://www.michigan.gov/documents/mdot/RR200TS_2_534137_7.pdf
  4. Semler, K. How can you get a modular home to my site Impresa Modular https://impresamodular.com/how-can-you-get-modular-home-to-site/