The pros & cons of prefab homes

Photo of a contemporary pre-fabricated home from Kasita

The pros & cons of prefab homes

If you’ve seen the success of shows like Tiny House Hunters, you know as well as we do that the fascination with prefab homes is back in full swing.

While not every prefab house is a tiny home, these properties — which by definition are built in sections and then shipped and assembled on site — do offer a level of flexibility and affordability that’s not often seen with conventional properties. Plus, modern pre-fab houses can merge smart design & technology at a more affordable price point.

If you’re wondering whether a prefab home might be the right fit for you, we’ve taken an honest look at the pros and cons of owning a modular home:

The benefits of going prefab

Lower overall costs

The main reason why people choose to build prefab homes is because they come at a much lower cost.

Research by Modular Homeowners found that these types of properties tend to bring a 20% savings over conventional homes, which is no small chunk of change when considering that conventional homes cost hundreds of thousands of dollars.

This savings is mainly due to labor costs. Since prefab houses are made out of prefabricated segments that are manufactured in a warehouse and shipped to the consumer for assembly, fewer workers are needed to do the job.

Quicker construction time

Since prefab houses are generally based off of an existing design, the manufacturer is often able to assemble the parts and have them waiting for a buyer.

At that point, construction time becomes much shorter since it is simply a matter of shipping the pieces to the buyer and having them put it together vs. building something from scratch.

Additionally, since the manufacturing happens indoors, the construction time is much less subject to delays due to inclimate weather.

Added sustainability

The construction method that’s used with prefab homes has the added bonus of being energy efficient. In this case, the bulk of products used in building the home will be shipped one time: from the manufacturer to the consumer.

This is much more sustainable than in a traditional building scenario where the components are sourced from different manufacturers and then sent to the construction site.

Additionally, these homes often come with options for add-ons like energy-efficient windows and solar panels, which make the home more sustainable overall.

The pros & cons of prefab homes

So, what are the down sides of going prefab?

More work for the homeowner

One of the biggest benefits of buying a conventional home is that once you purchase it, you’ll probably be able to live in it right away. All the logistical work has been taken care of for you.

With a pre-fab home, buying your home is only one piece of the puzzle. You’ll also need to buy or lease a plot of land to put it on, hire someone to lay a suitable foundation, and figure out the logistics of hooking up utilities.

Larger upfront costs

These days, when you buy a conventional home, you can expect to come up with a percentage (anywhere from 3-20%) of the cost upfront and have the rest of it rolled into a mortgage, which you pay off at a later date.

However, it’s a little trickier with a prefab home.

While the plot of land you’re buying can likely be mortgaged, your home’s manufacturer will likely expect to be paid upfront. You’ll need to be able to either cover that cost or work with a lender on finding a creative financing option like a construction loan.

Possible land/zoning restrictions

Unfortunately, you can’t put a modular home on just any plot of land. Many municipalities have restrictions on where these types of homes are allowed to be built. You’ll need to research available options in your area, but be prepared to face some limitations.

Resale potential

As we said above, prefab homes are certainly a flexible and affordable housing option. But, they aren’t for everyone.

If you decide to go with one of these homes, you need to know that you’ll be looking for a more niche buyer when it’s time to sell.

Since you’ll be marketing to a smaller percentage of the population, finding the right buyer may take a little longer than it would with a conventional home.

Looking for a prefab home? Use Open Listings to search modular homes for sale or land, and save an average of $8,500+ when you buy with us.