Guide to Prefab and Modular Homes in Seattle, Washington
Our prefab and modular home guide for Seattle, Washington and surrounding towns such as Yarrow Point, Clyde Hill, Kirkland, Redmond, and Bellevue, is intended to answer questions that buyers based in Washington State may have about the prefab and modular home building process. In this guide, we address general questions about the process such as, “why should I build a prefab home in Seattle, Washington,” and key decisions that you must make along the way - standard versus custom prefab home and reputable prefab companies that serve Seattle and its suburbs. Our answers to these questions as well as our cost outline for prefab homes in Seattle, Washington are listed below.
Why Might You to Want to Build a Prefab Home in Seattle, Washington?
Quicker Build and Installation Times - prefab and modular homes are manufactured off-site, in a controlled environment and then later assembled at the build site. The efficiency of off-site manufacturing facilities often allows for quicker build times
This is especially true for the surrounding areas of Seattle that are prone to inclement winter weather - homes can be manufactured indoors, year-round despite poor weather
Cost Controlled - with a highly controlled build process (homes are manufactured in climate-controlled warehouses), unforeseen cost overruns can be better managed leading to reduced overall cost. This is especially important for expensive areas in Washington State such as the neighborhoods of Madison Park, and Queen Anne in Seattle as well as Medina and Clyde Hill.
Sustainable & Modern - many prefab builders that serve Seattle and the surrounding areas of Washington State can build energy efficient, net-zero homes. Many manufacturers specialize in homes that are LEED and Passive House certifiable
Key Decisions to Make:
Home Location - building in an expensive neighborhood of Seattle such as Laurelhurst or Madison Park might have high up-front costs but a prefab home in these (or other high-cost) areas can be a sound long-term investment. When buying property you should be mindful of a few things that could affect your home build:
Slope of lot - this is important in some hillier areas of Seattle and Washington State where steep hills can make it difficult to build most pre-designed prefabs
Set back requirements
Floor area ratio or other zoning protocols that may affect the size of the home
Whether or not your neighborhood requires a design review
Standard vs. Custom - While many prefab manufacturers that operate in Seattle and throughout Washington state offer pre-designed floor plans some also offer options for partial or total home customization. This is in addition to companies who primarily serve as prefab designers and only work on custom prefab and modular homes. If you live on a tricky lot (uneven terrain, small-lot size, etc.) you may face a limited offering of standard home designs that are suitable for your situation - in these situations a custom home may be your best option
Modular vs. Kit Home v.s. Panelized - While all three of these construction techniques qualify as prefab home building techniques, there are nuances that you should know when building your own prefab house. These prefab home styles include:
Modular - homes are made up of multiple box-like modules. These modules are fully assembled and consist of floor, walls, ceiling, wiring, plumbing, and internal fixtures. These modules are constructed off-site and then later shipped to your desired location. Once on site, they are joined and connected to the foundation. Modular construction is one of the most affordable prefab building techniques.
Kit Home - all materials and components necessary for building a home are delivered to the build site. In most cases, an owner-builder can assemble the kit home themselves as a cost-saving method.
Panelized - the home’s structural components: walls, floor, ceiling, are manufactured off-site and then later constructed at the final site like a traditional build. While somewhat similar to modular construction, panelized building offers more flexibility in the home build process.
Architect vs. All-in Company - There are many steps in the prefab home build process. Major steps include land acquisition, home design, manufacturing, and assembly. When selecting a company for your prefab home, you should pay attention to the services your company offers. In some cases the company you choose may only offer a home design your home and therefore sub-contract out the manufacturing process. This leaves you responsible for acquiring land and later finding a builder to assemble the home. Other companies however, may be a one-stop shop and assist you in all stages of the home build process.
Financing your home - unless you are planning to pay for your home in cash, you are likely going to need outside financing for your prefab home. The two most common ways of financing a prefab home build are:
construction loan - a short term loan that you can refinance once construction is complete
temp to perm loan - a construction loan for the duration of construction that converts to a normal mortgage once your house is finished. The advantage of these loans is you only have one mortgage close vs. two with just a construction loan.
These methods usually allow you to finance both the land purchase and the construction of your home however, the underwriting and approval process on these loans can be lengthy (60+ days) as the bank is not only underwriting you as a borrower, but also the viability of your building plans. To get land imore quickly, buyers will often pay cash for their building lot and then the lender will credit the land purchase as a down payment percentage on the purchase.
Some of the best lenders for these products only operate regionally. Therefore, if you would like assistance we can provide recommendations here.
If you’re looking to purchase an ADU (accessory dwelling unit) or tiny home, then you may want to consider a personal loan:
Many personal lenders allow you to borrow up to $100k with no down payment
These loans are typically amortized over a shorter period than mortgages (up to 12 years)
These loans typically don’t underwrite the property and instead underwrite you as a borrower
Many of the best personal lenders are online and serve almost the entire country
The time to get approved for a personal loan is generally pretty fast (as little as a day to up to a couple weeks)
Common Questions
How much will it cost to build a prefab house in Seattle, Washington?
While certain variables such as location, builder, and floor plan will affect the total cost of building your home, it is our experience that the final cost of your prefab will range between $200-$400, as of May, 2019.
Is a prefab home a good investment?
Yes, in areas where the total cost of building your prefab home (land cost + building costs) is less than the average dollar per square foot sales price of homes in your neighborhood i.e. you are able to sell your home for more than it cost to build it. In Seattle, that includes areas where the average price per square foot is $400 per sq ft or higher. This includes most parts of downtown Seattle such as Queen Anne, Madison Park, First Hill, as well as the towns of Medina, Hunts Point, Yarrow Point, and Clyde Hill.
Can I finance a prefab home in Seattle, Washington?
Yes. The most common way to finance a prefab home is a temp to perm loan. This financing method starts out as a loan for the construction of your home and converts to a mortgage once your home is completed. Another financing option is a construction loan which is a short-term loan that you then refinance once the construction process is finished
What do the economics of an investment in a prefab home look like?
Our table (below) is an example of what the costs and potential benefits of a prefab home investment might look like. While there may be high up-front costs, there is still a chance for a sizeable return on your investment. In Seattle and its surrounding areas, much like other competitive real estate markets in the United States, one of the most challenging parts of the build process is finding a building lot at a reasonable price.In some cases it might be cheaper to buy and tear-down an existing home rather than purchase a vacant, build-ready lot.
| Item | Unit | Clyde Hill | Queen Anne | Kirkland | Notes |
|---|---|---|---|---|---|
| Cost To Build | |||||
| Cost of lot including closing costs & buyers agent | $ | 1,360,000 | 650,000 | 1,300,000 | |
| Cost of prefab home + construction | $ | 2,000,000 | 750,000 | 1,462,500 | |
| Loan Rate | 4.50% | 4.50% | 4.50% | ||
| Loan | $ | 181,440 | 75,600 | 149,175 | 4.5% APR (interest only), 18 months project time, 20% down |
| Value of tax deduction | $ | -63,504 | -26,460 | -52,211 | Assumes income to deduct and 35% marginal tax rate |
| Total cost to build | $ | 3,477,936 | 1,449,140 | 2,859,464 | |
| ARV (after repair value) | This is the term for post-construction value | ||||
| $ per sqft comps for new construction | $ | 865 | 825 | 700 | |
| Size of new home | Sqft | 5,000 | 2,000 | 4,500 | |
| Cost to buy similar home | $ | 4,325,000 | 1,650,000 | 3,150,000 | |
| Return On A Flip | |||||
| Sale price | $ | 4,325,000 | 1,650,000 | 3,150,000 | |
| Cost to Build | $ | $3,477,936 | $1,449,140 | $2,859,464 | |
| Broker Fees | $ | $259,500 | $99,000 | $189,000 | 6% |
| Closing costs | $ | $86,500 | $33,000 | $63,000 | 2% |
| Profit before taxes | $ | 501,064 | 68,860 | 38,536 | |
| PLEASE NOTE: THESE MODELS ARE NOT GUARANTEES AND SHOULD NOT BE CONSIDERED FINANCIAL ADVICE. THEY ARE FOR EDUCATIONAL PURPOSES ONLY AND PURELY ILLUSTRATIVE EXAMPLES OF POTENTIAL BUYING SCENARIOS. BUYERS SHOULD DO THEIR OWN DILLIGENCE BEFORE MAKING ANY PURCHASE. | |||||
How long will it take?
The answer to this question depends a lot on your particular location. Your town’s permitting and building process will play a large role in determining the timeframe for your build. Total, the build process can take between 1-2 years and maybe longer if there is a design review process.
Planning Departments in and around Seattle, Washington:
Reputable Companies that Serve the Seattle, Washington Area:
Has 8 collections of pre-designed residential plans, varying from standard looking cabins to ultra modern looking contemporary houses and ranging in size from small 600+ sf studios to 3,500+ square foot luxury houses
All-in-cost: $300-$400 per sqft
Offers 14+ models of small but modern homes that can be manufactured and installed quickly. They also offer the option to customize homes
All-in-cost: $180 - $350
Offer 4 highly-configurable, environmentally friendly home modules that can be combined to create your own eco-friendly home
All-in-cost: $350 - $500 per sqft
Has 26 floor plans, most of which have stylistic, inwardly slanted roofs
All-in-cost $350 - $450 per sqft
