Prefabricated homes can be an excellent option for homeowners wanting new construction without the traditional timeline. There are many advantages to going prefab including sustainability, lower costs and simple construction logistics, but there are some downsides to consider as well. If the idea of a prefab home seems too good to be true, make sure you factor the following points into your decision.

Land Cost

It might seem obvious, but you must have a place to build your new home. If you don’t already have an empty lot to use, you will need to find and purchase one, which can sometimes be just as difficult as buying an existing home. Even if you get lucky and the process is virtually painless this adds a line item to your budget. Prefab homes are significantly less expensive than existing homes and traditional new construction homes, but those costs typically factor in the land as well.

Not only do you have to own the land, you must ensure make sure it’s safe and suitable to build on. You may have to hire professionals to survey and prepare the land for a foundation. You also need to confirm you have the proper permission to build a prefab home on your lot. Some zoning codes prohibit construction of any kind and others may have specific restrictions against modular housing. Obtaining and paying for the correct permits can add to your overall cost before you even break ground.


While some prefab home builders assist with utilities, prepare for the likelihood that you will have to hook them up yourself. In setting up the foundation you will need to factor in sewage and electrical connections and in-ground cable depending on your area. If you aren’t able to connect to the main sewer line, look into the logistics and cost of setting up a septic tank. All the above means additional cost of labor, materials and your own time to figure out. Unless you can find a prefab builder who can take care of these details for you, this can be a major disadvantage.

Lack of Customization

The key advantage to prefabricated homes is that the pieces are built to a precise standard. You have customization options for certain materials and finishing touches like flooring and countertops, but you will ultimately find yourself limited by the design and construction of the prefab pieces. Any size or structural choices are typically in the builder’s hands because they build the same design multiple times. Depending on the builder’s catalog of options, you might have a plethora of cosmetic options. However, things like extra bedrooms or removal of interior walls are probably not going to be on their list.

If your dream layout is a top priority, consult a traditional home builder instead. Even builders who stick to the same style or type of house have the resources and flexibility to act upon your special requests—as long as you pay for them, too. While prefab homes can be inexpensive to build and good for your energy bills, the cost of buying and setting up the land and utilities might outweigh those perks. If you are considering a prefab home, make sure you consider these points and budget accordingly to make the best choice.