Tag: custom home

Spec Homes or Custom: Which New Home is Right for You?

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Major Differences between Spec and Custom Built Homes

Driving through the neighborhoods of Vienna VA, McLean VA, Great Falls VA and Falls Church VA, one would notice a big change from last several years – a large number of new construction homes of various designs becoming more and more common. If you are thinking about buying new construction home and wondering about the major differences between custom and spec homes, I hope you’ll find information in this post helpful.

By now, with the help of your real estate agent, you have located the area, and, now, it’s time to decide whether to choose between speculative (spec) or custom home.

New home buyers’ choices would fall on a spectrum with spec homes at one pole and full-custom homes at the other. With spec homes, the builder’s work is done and the buyer chooses from among homes that already exist and available for sale. The spec builder who sells a move-in ready home makes all of the choices from the floor plan to the color scheme. Consequently, spec homes are often built with the features, amenities, and neutral color scheme that appeal to the widest range of home buyers.

Moving toward the opposite pole, spec home builders may offer some customization options and upgrades to give the buyer the opportunity to personalize their homes. In fact, most new homes fall somewhere within the customization spectrum, with some choices made by the builder and others by the buyer. In most cases, the foot print of the house will not be changed, but, depending on the stage of the construction or sales contract, some walls can be opened up or closed in, the floors style and color can be selected and all decorative elements including tiles and wall colors can be selected by the home buyers.

For full custom homes, the buyer makes all of the choices: lot, architect, builder, floor plan, and all the details from foundation to rooftop—according to budget and design requirements.

Also Read:

Guide to Building A Custom Home: Pricing, Timing And More…

Building Time

Build time is a major difference between spec and custom homes. Full-custom homes can take a very long time to be designed and built (sometimes as long as 2 years). Spec homes are built from standard plans that the builder has built numerous times and the full house can take somewhere between 6 and 8 months to complete.

Floor Plan—Custom, Some Custom, Spec?

Choice of floor plan falls along a spectrum from completed spec home with no choice to custom homes with every choice. In between are spec builders who offer a choice of floor plans and custom builders who use plan books as a starting point.

The Specifications

For every new home, whether spec, or custom, specifications — from quality of cabinets, to flooring and carpets, to the type of wiring and plumbing—must be developed. The specifications are the detailed instructions that the builder and subcontractors use for bidding out work, ordering materials, establishing pricing, and constructing the home.

Obviously, developing specifications for full-custom homes can take much longer than for a spec home. The buyer must sign off on the specifications and pricing before the builder can start construction. If the pricing on the final specifications exceeds the buyer’s budget, compromises on upgrades, quality of materials, customizations, and even square footage may be needed. Changes to the specifications after the contract signing, require additional paperwork.

Options & Upgrades

It is a common practice, even with spec builders, to give buyers an opportunity to make choices such as floors and wall finishes, counter tops, appliances, and similar details. The purchase often includes a free design consultation to help the buyer make choices. Although the consultation may be free, the design center staff usually works on commission and may try to upsell features.

Even a “free” upgrade package may require a substantial deposit or prepayment. Everything has a cost and, since options and upgrades involve individual tastes and special orders, the builder doesn’t want to be left with materials and choices that can’t be undone if the transactions doesn’t close or the buyer has a change of mind. In addition to an earnest money deposit, the buyer may be required to pay up front even for included upgrades.

Also Read:

How to Vet A Parcel and Buy A Perfect Lot in Northern Virginia: 8 Land Purchasing Questions to Ask

Keep an Eye on Upgrade Costs

It’s easy to get carried away with upgrades. If you are budget conscious, you should know that too many upgrades can raise the price of a new home above appraised value compared to sales prices of comparable homes.

Unique custom homes can present an even more challenging appraisal situation if there are no comparable properties. The builder isn’t responsible for the home’s value and a lender won’t approve a loan for more than appraised value. The choice is to forgo upgrades that will increase the price beyond appraised value or to bring more money to closing.

Of course, personal taste, enjoyment, and pride of ownership rank high as criteria for choosing upgrades, but not every upgrade translates to future resale value or impacts appraised value. For example, an appraiser will note granite countertops, but usually won’t adjust for the quality grade—1 to 4—of the stone.

Your realtor will provide information on sales and resales of comparable properties that will help you manage upgrade costs and make value-adding upgrades choices.

Bottom Line

There are significant differences between spec and custom homes. If you are interested in learning more, let’s get started! Please schedule your consultation HERE.

AUTHOR: Natasha Lingle is a full time real estate agent serving Vienna VA and Northern Virginia communities. She is an Accredited Buyer Representative (ABR) and Certified New–Home Construction Buyer Representative. If you are planning to buy a finished new construction home or would like to build fully custom home, you can rely on her knowledge. As your new home buyer agent, she will guide you through the steps and processes of purchase, construction, and customization. In addition, she will:

• explain characteristics of new homes and highlight the differences between custom and spec constructions;

• evaluate pros and cons of purchasing a new home versus an existing home;

• help you understand new-home construction sales contract;

• and explain such nuances as “builder’s warranty”.

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Guide To Building A Custom Home: Pricing, Timing and More…

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Compared to speculative (spec) homes that offer the buyers a menu of options, but the builder makes most of the decisions, custom homes require buyers’ decisions about every aspect and detail. Furthermore, custom home buyers must be willing to take responsibility for communications, wait longer for home completion, and pay a higher price. Buyers opt for a custom home when:

  • Spec builders’ standard floor plans don’t meet needs and wants.
  • Buyers want to live in a particular location, often a unique building site, where spec homes are not being built.
  • They want a very personalized home.

Please consider these 5 points while planning for your new custom home:

1. Timing

Why custom homes takes longer than spec homes to design and build? A custom home design process starts on the architect’s drawing board where, with help of the engineer and the architect, the personal and unique design is developed. Decisions about the details take longer, because there are so many more to make and indecisive buyers may waver over decisions that a builder would make quickly. The transition from drawings to blueprints to building site can take several months. Depending on the size and complexity, build time for a custom home can take 9–24 months or longer.

2. Pricing

Custom homes cannot achieve the economies of scale of spec and production homes. The architect’s design may specify specialized unique materials (sometimes ordered and delivered from overseas) as well as increased framing and detailed finishing. In addition, custom homes are often built in unique and challenging locations, an interesting terrains and surroundings may enhance the enjoyment of the home, but they often increase costs for excavation and foundation engineering.

3. Choosing Custom Builder

Custom-home buyers really need to do the legwork to research and find the right builder. The builder should have experience in the price range and type of home that the buyer wants, has to have deep knowledge of permits and regulations imposed by the County and the competence to construct the home according to the specifications. Builders should be able to demonstrate the quality of their work and provide references. Ideally, the buyer should be able to see inside of some homes built for satisfied homeowners.

It’s important that the architect, builder, engineer, and buyer form a cooperative and harmonious relationship. You will have to interact with the architect, builder, and on-site construction superintendent. Choose a builder with whom you can develop a relationship based on mutual respect, trust, and communication as these are essential, because over the course of construction, the relationships will be tested as details go awry.

4. Designing Process: Where to Start?

New home buyers can start by collecting house plans to become familiar with how houses look “on paper” and grow accustomed to visualizing a finished home from looking at the floor plan. Plan books, home design magazines such as Designer Dream Homes and Custom Home and numerous websites offer sample plans to stimulate the imagination and identify needs and wants before meeting with a designer or architect or touring model homes. Northern Virginia’s Capital Remodel + Garden Show is one of the best places to get ideas and see what’s new in building, remodeling, gardening, landscaping, home décor and more.

In addition, collecting pictures and photos of architectural features and home ideas can help the buyer sort out likes and dislikes as well as establish needs and wants. Houzz.com is a great website with more than 13 million photos sorted by rooms and design styles. Buyers can even take photos of existing homes and write down addresses of homes that they like. Images—photos, magazine clippings, and downloads will help the buyers communicate clearly with an architect or designer. In addition, ask your real estate agent to give you a tour of new construction homes in the local area.

5. From the Drawing Board

Even when a buyer has definite ideas about house’s layout and design, the architect and the builder must convert the buyer’s vision into drawings, blueprints, and specifications ready for bidding and permitting. The process of designing a home involves numerous conversations between the architect and the buyer over several months. A typical custom home design process usually includes the following five steps:

  • Ideas: During the first meeting with the architect, the buyers describe their ideas for the home. Floor plans, magazine pictures, photos, and drawings can help the architect understand what the buyer wants.
  • Preliminary drawings: The architect develops preliminary drawings. It may take several rounds of drawings, buyer comments, and revisions to fine tune the preliminaries.
  • Working drawings: From the preliminaries, the architect produces working drawings for closer scrutiny. Buyers should take time to study the working drawings and study how the layout and flow of the floor plan will affect the experience of living in the finished home.
  • Blueprints and specifications: The architect turns the drawings into blueprints and specifications for construction, materials, and systems.
  • Bidding and pricing: Working from the architect’s plans, the builder submits the specifications to subcontractors and suppliers for bids. The builder’s pricing must anticipate increases in costs for materials; for example, lumber prices fluctuate frequently.

The builder’s final pricing includes materials, subcontractors’ work, permits, utility fees, surveys, building operations, and margin—the builder’s profit. Everything is included as a line item expense, including the real estate agent’s commission. Once all preliminary work is done, it’s time to begin the construction.

Important Tip: You have to decide if you will be designing custom home to fit the site/lot; or site/lot will be found to accommodate the size and type of home.

If you haven’t found a lot yet, continue to the next article How to Vet A Parcel and Buy A Perfect Lot in Northern VA.