Monday, February 3, 2020

Will MHI’s New “Cross-Mod” Confuse New Home Buyers?

MHI (Manufactured Housing Institute) recently introduced a new classification for manufactured HUD housing, the CrossMod!

I completely understand the premise. MHI and its members are continually looking to expand manufactured housing into the affordable housing market and the MHAdvantage which combines features, like a down payment as low as 3%, with the lower price and customizable finishes of modern manufactured homes was a great start.

However, that was not quite enough for our MHI brothers and sisters. Now they’ve come up with another classification they hope will get them a much wider audience.

CrossMod™ homes are placed on a permanent foundation, qualify for conventional financing, help challenge exclusionary zoning ordinances and are virtually indistinguishable from higher-priced, site-built options. Best of all, this new class of off-site built home can be appraised using comparable site-built homes.

Looking exactly like site built and modular IRC single family homes means that MHI members can compete directly with either one in almost every neighborhood in the US.

There is a caveat however that every new home buyer looking at a CrossMod needs to know. The dealer and their salespeople MUST disclose the CrossMod is really a HUD approved and certified home and NOT built to the stricter IRC codes and regulations.

I’d bet most new home buyers will not be that concerned with the differences if it means getting a new home in a nice single family community or neighborhood at a price far less than an new IRC home or a resale.

Modular new home builders and factories need to know this is not something coming over the horizon. It’s already here and Clayton is already marketing it to new home buyers.


Elite Homebuilders said...

And it’s this exact language that has caused the vast majority to use language interchangeably. I have met hundreds of customers that say they own a MODULAR home simply because it has finished drywall and a raised roof pitch. This is a poor attempt to label something that it absolutely is not. If you’re going to sell something that appears to be modular then build an IRC compliant home. If not then build a HUD. Stop trying to make a customer believe they’re getting something they’re not. SAD!!!

Elite Homebuilders said...

House for house HUD VS IRC the cost is so minimal the monthly payments are almost minute. Why would any ethical business or sales person even go there. Resale on an IRC home vs HUD is a vast difference with IRC having the much larger audience!

Tom Hardiman said...

Gary, I'd say there is about a 100% chance that this will further confuse buyers. I agree w Elite Homebuilders comments above - it almost seems to be intentionally confusing. I have no problem with these "enhanced" HUD code manufactured homes, just don't call them "Mods."

Anonymous said...

ABSOLUTELY it will confuse the buyer. If it is such a great things, why not educate the public on the benefits instead of camouflaging it by calling it something else. I came from that industry and have nothing but good things to say about it. But call it what it is. It's like calling a motor scooter a motor cycle. They both have a couple wheels and a motor, but that is where the resemblance ends.

Kevin said...

WOW, If Clayton Homes or any manufacturer thinks they are helping those in need of a affordable home by selling bait and switch products to the unsuspecting client they once again are only concentrated on the bottom line and not the real needs of their customer.

Selling size and shiny objects to the uneducated buyer doesn't create a product they need in terms of home ownership, value appreciation or workmanship, given workmanship is not in the IRC. Not to mention the zoning and/or CCR issues they will face in many communities that don't allow manufactured homes.

Stating they will be on a permanent foundation is misleading as pier blocking is a permanent foundation by some code officials definition. And stating they can be compared to site built comparable homes by appraisers is misleading at best, as subjective opinions on class and condition codes will lessen the value to that of a manufactured home in most URAR reports.

There is a large difference in serving the public and serving public opinion when the public is uneducated.

Brian Flook said...

This will not only confuse buyers, but will add tot he already confusing language of systems building. Modular, panelists, CrossMod, HUD... “I’ll just stick with a regular house,” is the response I suppose most buyers will have whether spoken or thought. Modular builders have struggled for years to disassociate with mobile/HUD builders, yet in many markets they park their modular homes on a parking lot along the same popular route as the mobile home builders further confusing customers... it’s the ‘they all look the same’ syndrome.

I’ve said for years, modular isn’t an industry, it is a process - a better process by far - but a process no less. As long as modular is positioned as an industry, it remains an easy target for those wanting to poke holes; a weak compromise for builders who fear the stigma, and worst of all an upgraded mobile home for most residential consumers.

This is bad news for modular builders!

Builder Bob said...

Presented with both options, the average consumer will simply choose the lower priced option based on first impressions. That's marketing and Clayton is the best at it.

The other factor that nobody wants to talk about is the huge difference in the amount of red tape between a HUD based home and an IRC based home. That one factor could result in home buyers choosing the CrossMod option. McDonald's taught us to walk up to a kiosk, touch the item we want to eat on the screen and within a minute our meal is ready for pickup at the counter. They even make us get our own drink and clean up after we eat.

Ease of purchase. That's the thing Clayton will be pushing. Have you forgotten that Clayton is buying thousands of improved building lots and developments all over the US?

Anonymous said...

I believe that if you could build an "On Frame" Modular Home (IRC Code)(Which Has Been Done!!)... and be able to have a "Engineered Slab" (Which Has Been Done)...That it would be the Answer to providing a Modular Home, With a Heating/Water (Savings in On Site Cost) self contained system, (similar to HUD products)..Savings in Ground Preparation, Savings by Not having to utilize a Crane, (Equally about $30,000.-$35,000.)...Then you would able to Offer A True Modular Home, Built by Code and providing Safe and Affordable Housing for All. One Issue seems to be the Name, Modular, whereas it says the a Modular Doesn't Have a Frame... By Having a permanent Frame, (Stronger Built) Installing on a Slab application, Anchoring the Home Down, you have a Home that is More affordable that a Home on a foundation. Stick builders are able to build Homes on Slabs, Why can't We..??? after all, This suppose to be For the Consumer and/or the Finance co.,etc....

Anonymous said...

Tom Hardiman, this is a lot of bluster over nothing. Why are we more worried about what MHI does than trying to make the modular housing industry better. Do that and who cares what the trailer people at MHI do next.

Anonymous said...

On the West Coast, mods and HUDs are built in the same factories, with the same employees, same management, same materials except for the mandatory IRC upgrades. I do both in coastal California on permanent perimeter foundations with attached garages, two story, etc. and there is no financial benefit to mods for consumer, there is always a way to finance HUDS and the extra cost/ time involved with mod far outweighs any finance/ resale difference. Well done, good quality HUD homes provide value for the consumer.