Home Builders – Understanding the difference between a Custom Builder, a Spec Builder and Tract Builders

There are several different types of homebuilders and it’s important to understand the difference between them.  The main terms used are Custom Home Builders, Spec Home Builders, an Tract or Production Builders.

Custom Home Builders are generally small-volume builders and build one-of-a-kind houses on your land. They may offer design/build services or just general contracting services. They tend to build luxury features in homes, such as taller ceiling height and larger doors and room sizes. The homebuyer can make big changes, like adding another garage, custom rooms and additional bathrooms. Building a custom home provides possibilities to create a home that truly fits your lifestyle.

A custom home might be a very large, medium or even a small sized home. It could be very standard in many ways but still be a custom home. People often think of a custom home as being an elaborate, large mansion, while that can be the case, both large estate and a small house could be custom homes.

The homeowner, homebuilder and architect decide on variables for the home that will make it different from other homes. It will usually be customized to the new owner’s tastes and desires for amenities, features, size, creative touches, and style. Of course, all this flexibility and customization comes with a certain price – time and cost. As either the homebuyer or the homebuilder you will be dealing with more decisions, more stress, more room for errors and possibly more setbacks than the average production home. All of the additions and unforeseen costs may not be clear at the start of a Custom home project, but can certainly contribute to the overall cost.  Custom builders tend to be associated with high quality work, and are focused on a smaller local or regional market.

Spec Home Builders are built by builders who buy a lot or land, build a house, and then sell the home. The builder “speculates” that he will make money from this transaction of buying a lot and building a custom or semi-custom home on it.

It may sell during the course of construction, in which case, the homebuyer may be able to choose many of the finishes, however the builder, rather than the homebuyer determined the “floor plan” before breaking ground.  Spec homes are not always large custom homes. Oftentimes, the home is a small or medium sized home with custom features and styles. A spec home could be a very plain home or it could be a large, luxury, decorated mansion. Either way, if the builder bought the land and is building it specifically to sell, it would be thought of as a spec home.

Tract or Production Home Builders are developers or builders who own a large plot (tract) of land, which is divided into numerous smaller lots for “stock plan homes” to be built on. A Tract or Production builder generally has model homes that will be the home designs built on these lots. Usually the subdivision is built in phases and once the 1st phase is nearing completion and all sold out than a next phase will begin according to demand.  Generally, there is not a lot of opportunity to make changes to these homes but most will offer some structural and design options.

Tract builders are large-volume builders and build all types of housing. Single-family, condominiums, town houses and condominiums are a few properties types. The faster the properties sell, the faster they try to keep building to keep up with demand.  Elements like hardware cabinets and appliances are the more obvious areas where money may have been saved. Other areas might include framing components, paint grades, shingles and carpet grade to mention a few. If someone isn’t familiar with construction methods and materials, these components are not obvious to the typical buyer.

The timeline for building Tract (Production) homes is much quicker than a custom home, all well as less expensive.  One of the drawbacks is that there are many identical houses in the same community and also the lack of customization. Sometimes Production Homes are referred to negatively as “cookie-cutter” homes, due to the homogeneous nature of these house plans.

Infinity Realty Group
20 S Main St #260
Winter Garden

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