There are a number of ways to become the happy owner of a newly constructed home. We’ll talk about the three main categories of newly constructed homes and the home builders who tend to specialize in each. They often cross over as well, doing one type then switching to another depending on the market, timing and home buyer demands.
Custom Home Builders
First let’s define what we mean by a “custom” home. It is a home that is built as a collaboration between the home buyer and the home builder. The buyer will not only select or approve the lot where it will be built, but also many other facets of the project.
The buyer will participate in design of the floor plan, specifying rooms and their sizes and the overall size of the home. All materials, finishes, flooring, wall coverings, counters, plumbing fixtures and other features will be chosen by the buyer. There are various ways in which a project budget is set up, from cost-plus to the more common set price with buyer allotments for choices. A dollar amount is set for doors as an example. The buyer goes out and chooses the doors, trying to stay within the budgeted amount. Going over budget results in a change order and added cost.
The home builder who does mostly custom homes is someone who generally enjoys working directly with the home buyer to create the home they envision. Sometimes it can be difficult, especially if the buyers are not able to envision the final results of their choices and decisions. They may specify a design or look that they do not like once it is completed.
For home buyers who are good at visualizing their finished home from floor plans, drawings and renderings, the project can be fun and results in the home of their dreams. The home builder takes pride in the creation and often asks that the buyers become a reference and even let potential future customers see the home.
Spec (Speculative) Home Builders
Spec homes are the result of a carefully constructed set of plans and specifications, and they’re built with no home buyer in the wings. The speculative nature is in the completion of the home without a buyer, assuming one will appear within a reasonable time after completion. Spec home builders try to stay abreast of home buyer feature and amenities desires so they can create a home that will sell quickly.
The lot, floor plan, and all of the fit and finish items are specified before the project is even started. The budget and ultimate selling price should fit into the neighborhood and not be far above or below the size and quality of surrounding homes. If the home buyer catches the project early enough they can often make some choices of finishes and fixtures, either downgrading for cost reasons or upgrading as a preference at an added cost.
Though catching a project early can offer some selections for the home buyer, they will be limited and definitely restricted by the budget. As all aspects of a spec home project are carefully laid out before it is even begun, there isn’t a lot of room for changes. Some home builders do not want to work directly with buyers during the building process, which is why they do spec homes. They prefer that there be no buyer interference or involvement, and they simply list the home for sale upon completion.
Spec homes offer variety in new neighborhoods, but they will adhere to certain basic square footage minimums and perhaps maximums, as well as covenants and restrictions as to exterior finishes and other items visible on the exterior. They are definitely less expensive than a similar size custom home, as the builder selects finishes and fixtures to fit the project budget and ultimate selling price.
Tract Home Builders
Tract homes can usually be easily identified by the similarity of the structures. The entire subdivision or tract project usually consists of just a few floor plans replicated over and over. They can be mixed in location, having different floor plans next to each other, but the passerby can easily identify the tract subdivision by the very similar look and exterior finishes of the homes. Floor plans are also often reversed in order to provide some choice for buyers, with the floor plan simply turned but retaining the same rooms and sizes.
The biggest advantage of a tract home is the price. The fact that the same floor plans are replicated with the same finishes and materials allows the builders to buy in bulk to cut material costs. There is also some labor cost savings because workers are doing the same floor plans over and over, often speeding up the projects.
Now you have the basics and can decide on the type of new home you want. If you want to be involved in all decisions and end up with a home built to your specifications, then the custom home is the way to go. The majority of new home buyers end up with a spec home, though they may get some input into finishes and fixture selection. When a low price per square foot is the primary goal, the tract home should be your target.