Custom vs Spec Home

Monday, August 12, 2013

images 21Having never been a spec home vs a custom home builder, I had to rely on the perspective of others for this article. My main reason for not building a speculative home was purely profit driven. I have heard the horror stories of those that bought properties several years ago to build on or purchased tear down homes to remodel. Most of these firms are now out of business due to the lack of adequate financial planning and or backing. Today most are cautious to say the least, and banks that once supplied financing even more so. 

A sure thing does not exist in the home building market, either there is an attractive location and activity in a given area or you're a pioneer and risk taker. The rewards for taking these risks can be greater than building with a buyer. However, the longer your built property sits empty the more likely your profit margin will decrease accordingly.

Many like the opportunity to build without constant interaction with a Home Owner. Others enjoy working together with an educated buyer, delivering the finished product which was envisioned by both the architect and buyer. The obvious upside to custom building is realizing the profit for the project now as opposed to, when the property sells.

Other costs associated with a Spec home is realtor commissions. Sharing up to 7% of the gross with a realtor is hard to accept when you took all the risks. At some point if you are building a number of spec properties it might become feasable to have your own in house sales team. With your own sales team you can be assured that your properties are shown by those that understand all aspects of the home they are selling.

Typically, a custom home will cost more per square foot simply because there are more unique features, appliances, and design elements used than in spec homes, where the use of similar plans, products, and materials keeps costs predictable.

For those that are uncomfortable with the communication between the buyer and builder we have a solution, the SimpleBuild system. SimpleBuild allows for seamless communication between all partners in a custom build. Builder provides buyer with selections to be approved without speaking to them, the same goes for progress updates. The homeowner can login to find up to date photos or video of the project, in some cases they can even produce a change order. What both the builder and buyer will find is that with additional access to communication with each other makes the entire building process a much more pleasureable one.

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With the introduction of 3D printing into industrial construction the price of building will be significantly decreased. Of course even in this case there will exist certain patterns (we people love patterns, don't we?) so customization will cost somewhat more. Still purchasing a house will not be a big deal anymore.

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