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Homebuilder 101: The Differences between Custom, Spec, and Tract

posted by Hannah November 15, 2018 0 comments

Shopping for a new-construction home means making a lot of important decisions. One of the first major priorities is what type to choose: a custom, spec, or tract home.

But before making this decision, you need to first know how these would fit, or not, into your ideal home design. Below, are the ins and outs of these types, as well as the pro’s and con’s, to help you make your decision.

What is a Custom Home?

First, let’s look at what the term “custom” generally derives from. Specifically built for an individual customer, custom homes involve the construction of a home targeting each individual customer’s specification. This typically includes the floor plan, land/lot location, and design features such as colors of materials and desired fixtures. These commonly are created to best meet every customers’ specifications when compared to the alternative types of homes.

What does a Custom Home Include?

Buying a custom home is like hiring a tailor to help you create your own, unique outfit. You pick the materials, design, and work closely to make sure it fits your needs like a glove. Simply put, custom homes are site-specific, and built from a unique set of plans for the individual customer. Although often associated with larger-scale homes and mansions, these might be a very large, medium or even a small sized home. Features of these homes range from the very standard to the elaborate and elegant. The homebuyer is allowed maximum flexibility, and can make big changes, such as adding another garage, various custom rooms, and top-grade bathrooms and appliances. The design of these homes tends to lean more toward luxury, with features such as taller ceilings, wider doors, and larger room sizes. In addition, homebuyers get flexibility in location, with more freedom to select their ideal location and environment.

Who Builds Custom Homes?

Builders who provide these types of homes are generally small-volume and will construct these individual homes for you on your purchased land. They may offer anywhere from design/builder services to just general contracting services. They stand apart from their production builder counterparts, who tend to construct many homes throughout the year. The construction plans for production builders are generally do not differ from the ones selected by the building firm. Whereas, custom builders dedicate much more time on each project. This means working on a maximum of 10 homes per year. Instead, the building process of custom homes is viewed as a partnership between the homebuyer and their builder. It is imperative the two works together to design and build exactly what the customer requests to accomplish mutual goals.

What are the Pros of a Custom Home?

Perhaps the biggest plus of a custom home has to do with buyer control. From the purchase of the lot, design input, and amenities, what’s important is included while what’s not wanted is not added to the overall cost of the home. Some of the perks of customizable features include the ability to be eco-friendlier. Features like solar panels, water-saving appliances, insulation to improve heating efficiency and the use of renewable or recycled building materials are all popular techniques to improve a home’s efficiency. Custom amenities these days means taking a turn to the world of tech-friendly appliances. And, the rise of multigenerational living means the ability to reconfigure a floor plan to add an extra mother-in-law suite to meet the specific needs of this living environment.

What are the Cons of a Custom Home?

On the other hand, one of the biggest deterrent to building a custom home is the overwhelming feeling of uncertainty. Customers question finding the perfect builder, to help them build their dream floor plan, as well as the timing of the build, and whether they will be satisfied with the result. Basically, the purchase of a pre-built home might not be ideal, but at least the buyer can see what they are getting in to ahead of time. This is especially true if there are no blue prints handy.

What is a Spec Home?

Whereas a custom home is a tailored outfit, the spec is one you can buy right off the rack. The term “spec” is short for a speculative home for sale. Spec homes are brand-new properties that are completed (or nearly completed) before they’re sold. A spec home most often comes with much of the design complete. As in, the builder has already made a lot of decisions regarding what will go into constructing the home. When specs are abundant, such as part of a larger community of similar homes, you can often find one that is half-finished. This means the ability to make the rest of the product selection yourself. On the other hand, when specs are few, many builders use their specs as models, so they are already dressed.

What Does Spec Home Include?

Just like custom homes, specs come in all shapes and sizes. Unlike custom homes, much of these designs are at the mercy of the builder, versus the homebuyer. Oftentimes, it is a small or medium-sized home with pre-customized features and design, based on the builder’s preferences. Either way, if the builder bought the land and is building it specifically to sell, it would be thought of like a spec home.

Who Builds Spec Homes?

Builders who specialize in Spec Homes buy a lot or land to build a house, and then sell the home. The builder assumes there will be money made from this type of transaction. These builders are often aware this is a speculative venture. Meaning the home was built with the intention of selling it for a profit, as-is or with very minimal changes. There are some builders who specialize in building just spec homes. To put it plainly, these builders have a preference toward building homes minus the complications that stem from on-hand, customer involvement. Either way, depending on the general price range of the home, builders usually make it a priority to build what will sell the easiest. Most experienced spec home builders will already have an established idea of what the people like and are willing to buy.

Pros of Spec Homes

Spec Homes are almost always going to be a safe investment. This, of course relies heavily on the builder. Still, it’s safe to assume the builder is also going to want to develop a decent property that will turn over a nice profit. These homes are well done, are balanced in terms of amenities and upgrades, built in promising neighborhoods, and are easily marketable. These homes are quick and easy solutions as they are often completed and ready for immediate occupancy. This makes for what is probably the most appealing characteristic of a spec home. That is, the consumers’ ability to see what their money is buying.

Cons of Spec Homes

The biggest drawback to spec homes is the inability to make a lot of custom changes to better you’re your lifestyle needs. Instead, customers are moving into homes based on the builder’s idea of what your home should be like at the time of the purchase. This means that all the special features you have been dreaming up to include as part of your home can either be available, or not. And, those items that weren’t on your list of “needs and wants” could make up a good portion of costs already included in the sales price.

What are Tract Homes?

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Tract homes are named after the large tract (or parcel) of land they are usually built on. These typically reside inside of planned communities, nestled right outside a city’s core. Because of this, tract homes have a reputation of being more “cookie-cutter” or “off-the-shelf) housing. Each developer has their own design choices to establish a cohesive look and feel. Generally, there is not a lot of opportunities to make changes to these homes. Single-family, condominiums, town houses and condominiums are a few properties types.

What Does a Tract Home Include?

Typically, a builder will construct these in quantity and offer a customer the choices of Model A, B, or C. Your options may include an available lot and the ability to pick a floor plan (pending the stage of the development), or an already built home in the tract. These houses come with standard amenities that are built into the price and can include upgrades that add to the price.

Who Builds Tract Homes?

Tract, which is interchangeable with “Production Home” builders, are developers who own a large plot (tract) of land, divided into numerous smaller lots. These lots are then used for “stock plan homes” to be built on. The floor plans offered consist of one of the few popular plans the builder offers for sale. This allows for the mass-production of homes built over and over, often hundreds of times.

Pros of a Tract Home

The lower price is the most obvious leader. The builder typically purchases bulk materials and passes on the savings to you. The floor plan, developed to appeal to a mass market, can be appealing. There is usually little doubt about what type of house is being built next door, and this means the community will build out more quickly. Many planned communities include additional perks like clubhouses, pools, tennis, and sports club. They are usually built near major transportation hubs to help simplify transit.

Cons of a Tract Home

On the flip side, these homes are built with price-point as a major consideration. Turning a profit depends on how quickly and cost-effectively the builder constructs the home. Always check for both the quality of materials and construction methods.

In Summary: What do You Choose?

In the end, your final decision is going to narrow down to many important factors such as time, investment, and lifestyle needs. Whichever you decide, it’s important to remember that there is no wrong choice when it comes to what fits your lifestyle needs best.

How did you decide on your type of new home builder? Any additional important information, or tips and tricks when it comes to which type to choose? We would love to hear from you! Leave your feedback in the comment section below.

Interested in learning about the many benefits of new home ownership that come with every D.R. Horton home? Reach out today to one of our customer care specialists to learn more!  

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