As you plan your new home, one of the first questions to consider is whether working with a smaller, custom home builder or a higher-volume home builder (also referred to as a production builder) is the best choice for you.
Both types of builders are excellent options and each can deliver a great new home for you. Much of the decision will rest in how many choices you wish to make – as well as how much design input you’d like to have, in partnership with your builder, during your home’s construction process.
At its core, the difference between a production builder and a custom builder is simple:
A production builder simultaneously builds multiple homes based on a library of home plans. Each home is customized in several key respects. Buyers personalize their home by selecting products in many categories (such as appliances, cabinets, countertops and flooring) from a menu of options offered by the builder.
A custom builder typically creates a one-of-a-kind home that offers an even greater range of design choices that’s often built on a single lot. Buyers who wish to select most details of their new home often decide to work with a custom builder.
This difference in approach between custom and production builders will help determine what product and design choices you’ll make and also shape how you and your builder will work together.
In some parts of the country, particularly in southern or western states, the production model of construction accounts for most new homes built. In other areas, such as the Northeast for example, custom homes comprise a much larger share of new homes. That being said, both types are available in most parts of the country. Here’s a breakdown of what to expect from each:
There are two main types of production builders: locally based/regional firms and national companies.
Locally based production builders construct homes in multiple new home communities in a specific city or region. National builders construct hundreds or even thousands of homes per year, often in large master-planned communities, in many states and cities across the country. While the scale is different, the basic process that local, regional and national production builders use is similar.
According to the National Association of Home Builders (NAHB), most production-based home builders:
A production builder can usually deliver the same size home for less money than a custom builder. The reasons lie in volume purchasing power when buying building materials and land and a higher volume, often systematized approach to construction.
Buying the right type of land is a big part of a production builder’s strategy. Many larger builders construct homes in large, master-planned communities. A production builder’s scale and access to a large number of lots (building sites) in such communities also allows the construction process to be fine-tuned for great efficiency.
Higher volume builders can also pass on cost savings by purchasing building materials in bulk. Just as large airlines can lock in low fuel prices by ordering in volume, production builders can use their size to order materials for hundreds of homes at a time, often at lower prices.
In addition to using scale to generate cost savings, production builders are highly focused on quality. The top companies deliver carefully designed, highly engineered, solidly built homes whose components and systems are designed and optimized to work together. With up-to-date, appropriately sized heating and cooling systems, such new homes are much more energy-efficient and comfortable than older homes.
An advantage of large new home communities is that the developer will often give careful thought to protecting open spaces. The developer may also provide an enticing array of community amenities – such as a clubhouse, fitness center, swimming pool, hiking trails, sports fields and more.
The community developer also works closely with each builder to insure an attractive mix of homes. In addition to mixing models or floorplans from several builders, each home plan typically offers multiple elevations to vary the look of the front of each home. By changing the placement of windows, gables, and the size and shape of the front porch, a single floorplan can be built in several different looks.
To add further design appeal, each elevation can usually be constructed with a differing type and color of exterior. A given model home can be built with various in brick, siding, stone or stucco and varying shades of color to offer pleasing diversity and individuality.
As a buyer working with a production home builder, you’ll typically start by selecting a lot for your home and your favorite floor plan from the builder’s library of plans. The next step is to select an elevation. Many production builders also offer the opportunity to specify the use of a bonus room; based on your needs, a bonus room can be built as an extra bedroom, a study or even a media room.
Next, you and the builder will work together – often in a Design Center – to further personalize your new home by selecting design options.
While the process varies from one builder to another, you’ll typically select your favorite style (such as contemporary or traditional) and your favorite colors and finishes for key products in your home such as appliances, cabinets, countertops and carpet and flooring. In most cases, you’ll also select bath and kitchen faucets and sinks and fixtures as well as lighting fixtures for your home.
Buyers who select a production builder typically cannot change the basic structure – the floor plan, layout of rooms and square footage – but each model has a wide array of attractive options to choose from to personalize your home in many respects. In addition, many builders offer a series of “good, better and best” options at corresponding price points to help simplify your product choices.
Production builders work hard to make building a new home fun and exciting. In addition to model homes where you can experience the look and feel of the various rooms and options, most larger home builders also have a well-defined set of steps to help guide you through during the steps to buy, design and build your new home.
If you have your eyes on a particular piece of land, want to build in an established neighborhood, already have a set of floorplans, or want to be heavily involved in each step of your home’s design, then consider a custom home.
As the name implies, the process of building a custom home is less scripted than a production home, because there are no pre-defined choices or menus to choose from. With custom homes:
Expect to pay more for a custom home than a production model of similar size and floor plan; after all, the typical custom builder doesn’t enjoy the economies of scale and labor efficiencies that a production builder does. Of course, the actual price will depend on a number of variables – the most obvious being the size of the home, the intricacy of its design, the building products and materials you select, and the land you purchase.
While many people associate custom homes with large and expensive homes, a custom home can range from a simple ranch-style home to a more elaborate and multi-story floor plan designed around your lifestyle.
Since most custom builders create homes in a variety of architectural styles and price ranges, a great place to start when selecting a custom builder is to ask to see photos of the past homes they’ve built. Many custom builders maintain strong relationships with past home buyers, so you may also be able to work with a custom builder to set up an appointment to visit a home they’ve previously built.
Once you select a custom builder, you can supply your own floorplan or work with an architect to design a home from scratch. Be prepared to select custom woodwork and to select nearly any type of appliance, flooring and cabinet. As a custom home buyer you can select most details of your home. You can work closely with the architect and builder to site your home and to design a floorplan that works around existing trees on your land and that places your windows to take advantage of the best views.
The good news? When building a new home, your choices are nearly unlimited; the main restrictions are your budget and any building code or zoning limitations. If you find that freedom to create a home from a blank sheet of paper to be exciting, then building a custom home is likely for you.
The key to working with a custom builder is to establish a realistic budget and to stick to it, even when you’re enticed by a lovely but higher-cost option. While most buyers realize that additional customization will increase the home’s price, unexpected land-related costs can take you by surprise, so it pays to do your homework.
At one end of the scale, you may hold the deed to a flat suburban lot with in-ground utilities already available at the curb. Such a finished lot is ready to build on.
On the other hand, you may be considering wooded, rural or steep hillside property. While such land is no doubt scenic, the upfront costs of preparing previously undeveloped rural land for construction is typically a significant additional cost in addition to the purchase price of the land. Site prep – building a driveway, bringing in water, electric and sewage lines, and excavating the foundation – can be quite expensive. Your builder and architect can help you estimate those costs, too.
Even if you’re building on already developed land, you and your architect and builder need to carefully research zoning or deed restrictions. For example, you may be required to site your home on particular part of the lot and to keep all structures a certain distance from the property line – leaving insufficient room for that three-car garage you want. To avoid surprises, have an attorney clarify all restrictions and get estimates on site work (either via the builder or on your own) before completing a land purchase.
Because the process of building a custom home is, not surprisingly, truly customized, you’ll typically spends a lot more time designing and constructing your new home than you would if you work with a production builder.
During each stage of design, you’ll have a very wide range of choices to make your home truly unique. Given the many choices involved, it’s not unusual for custom home buyers to experience a few more emotional ups and downs than a production home buyer may experience in their new home journey. That said, knowing what to expect at each stage – and especially what choices you’ll make and when – can make your custom home process smooth and result in the home you’ve always dreamed about.
Equipped with the information above, you’re ready to decide if a production or custom builder is your best bet. A good production or custom builder will each deliver a high quality home that’s personalized for you with much better energy efficiency and indoor air quality than a typical resale home. So, the difference comes down to how many choices you’d like to make to determine the unique look and feel of your new home.
Broker Associate, The Real Estate Network
New Home Connection, Heritage Realty
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