Home Builder Choice, Part 3: Custom Design Builder

Rinek Architecture

Having reviewed the basics of tract and semi-custom home builders, let’s take a look at the custom design builder. This type of contractor – including Rinek, Inc. — delivers homes that breach higher, sometimes much higher, levels. A custom design builder may be able to compete with the production and semi-custom builder if asked to, but it offers the flexibility to build whatever a buyer may dream of owning. The program for home and project design may be far more advanced. The unique services offered are unlimited.

The communities that attract custom homes tend to be architecturally restrictive and exclusive. The property, perhaps already owned by the buyer, may be much larger, so the building “envelope” for home design is commensurately large. The custom design builder often builds multi-story homes, or a sprawling single-story residence. Designs are as unique as the buyers. Quality of the features and products are first rate. The home’s infrastructure is more advanced. HVAC systems, for instance, may be systemically integrated into the electrical and control systems to create a more intuitive, cooperative operation.

Available project design services are comprehensive and often provided for the buyer in house. The builder acts as a director and may coordinate a “white paper” design approach that utilizes a full design team. Team members may or may not be on staff, but you can be certain that they are proven, trusted resources. Each project draws upon the right professionals who work as a coordinated “dream team”. There may be an architect on staff, or the builder himself may be a creative design professional who maintains a respected track record. Alternatively, the builder may work closely with an architect engaged by the buyer.

The custom design builder works closely with the buyer, acting as a “concierge” — an integral part of the project team. The project will start with an in-depth discovery and planning session where the buyer shares personal vision and preferences. The custom home builder will incorporate that ground-floor foundation of design throughout the construction process.

The home’s construction may incorporate the latest technologies, paying homage to a client’s goals, not just for aesthetics, but for lifestyle, desired layout, and unique preferences. The interior styling is often coordinated with a design professional. Thus, the project is looked at comprehensively, blending exterior and structural elements in harmony with the interiors to reflect the buyer’s preferences.

This approach makes it difficult to pre-determine the cost per square foot. At the outset, an average or target may be discussed as a guide. This allows planning to match the buyer’s expectation. The buyer is informed in advance when a choice may affect budget.

An experienced custom design builder should be able to offer strict budget control throughout the design stages. As a project is fleshed out, however, the buyer’s wishes may evolve. Appealing elements and options may cause the owner to re-evaluate and possibly adjust the original budget.

For example, if a buyer originally expresses a desire for ceiling-to-wall crown molding, a builder can account for it. If, however, the budgeted 6-inch molding is specified during the design phase as a three-piece 12-inch width crown assembly, the budget for this element may need to be increased by 30%. The options are presented and explained so that the buyer can make an informed decision. As the builder-client relationship grows, this kind of decision making is done with patience and an understanding that education is part of the process. The buyer has the chance to discover, consider, and choose.

A smart custom design builder knows that each client is unique and buyer goals are singular. The builder must be flexible and strive to accommodate any goal. This may include building a simple, economical home, a modest mid-quality home, or a fully realized custom dream home. The buyer’s vision and budget are of primary importance.

What a buyer will find in working with a custom home builder is more experience in the field and in the office than many competitors. The builder may use this experience to set minimum standards for product materials that exceeded building codes. The custom design builder may also insist on using highly skilled tradespersons to ensure the highest quality for the finished home.

In the end, it is admittedly a challenge for a buyer to compare builders and their products by using an average cost-per-square-foot analysis. To simplify the process, it’s best to determine the type of home builder to work with and then entertain competitive bids on an “apples- to-apples” basis.

Cost Per Square Foot, Part 2: Semi-Custom Home Builder

The Crassatella Front Door

Let’s take a look at  the semi-custom home builder and how it differs from the tract builder. When looking at these smaller, often independent builders, the possibilities for design and feature choices start to open up. You can expect the pricing to be higher. Semi-custom builders may offer model homes, but they are more likely to change plans to suit your needs.

You may already own the property on which you want to build, or the builder may help you find it. Their model homes may or may not be found within a gated community. Within a master-planned community, the semi-custom builder will likely be authorized to build in more than one neighborhood or it may be easy for them to qualify to do so.

Many communities have restrictive architectural and project requirements that make home building more expensive. These communities may have a higher cost of entry. Home owner association (HOA) fees may be required just to review a project plan. They may also have rules of builder compliance that cost the builder more to operate as it builds the home.

The builder will offer a larger array of exterior and interior features, and can work within HOA dictates. For example, some subdivisions have a set “theme” for a home’s “look” (elevation).

A semi-custom plan may include a larger kitchen, incorporate generous bath spaces, and utilize a variety of interior design framing features. These may include archways, higher and/or trey ceilings, plant shelves, art niches, etc. The windows and doors may be larger and more plentiful. Materials tend to be of better quality, and the labor force used may be more talented and/or experienced.

Design creativity becomes more tangible, and interaction between client and builder will be more localized and personal. Often, these homes are placed on larger lot parcels, and are less likely to be builder ready.

A semi-custom home builder usually does not have an “in house” plan designer, nor a comprehensive design center. The builder may have relationships with a drafting team and an architect with whom they prefer to collaborate. They will have satellite suppliers and may offer hundreds or thousands of choices for tile, flooring, cabinetry, appliances and finishes. This requires the client to browse through an almost endless supply of options as they shop online or in person, traveling to various vendors.

Choices made by the buyer can drive up cost per square foot. One roofing material may cost as much as 100% more than another. There may be twice as many windows, more doors, a more complex roof line option, and each side and the rear of the home may be enhanced to show more detail. The kitchen size may double the cost for cabinetry and tops, the flooring may be higher in cost, and the price may differ from room to room. Opting for floor tile throughout, for instance, can cost three or four times as much as pre-negotiated carpet. The systems in the home are usually more comprehensive and more expensive (HVAC, electrical, plumbing). Focus on energy and maintenance saving features is more likely.

Because of the variables offered in semi-custom home decisions, it is not unusual to find pricing that starts as much as 30% higher than that of a tract builder.



How Home Builder Choice Affects Cost Per Square: Tract Builder (Part 1 of 3)

Project Management

Buyers looking to build new homes are quick to ask: “How much does a home cost per square foot?” Most understand that there are variables, but there is a learning curve. It depends upon the specific type of home, the impact of design factors, and the features they may want in a home. Let’s look at tract, semi-custom, and custom home building.

Many find it difficult to compare what one builder says versus another. Some become disillusioned once they start down the path with one or more builders to determine which one might be a good match. As they attempt to perform due diligence in selecting a builder, they are sometimes frustrated in trying to compare “apples to apples”.

How can you make an informed decision at the outset? How can you avoid a situation where financial expectations don’t match the result once you’ve chosen a builder, developed a design, and accurately defined all of your goals for your new home?

Critical to success is understanding the three primary classifications of builders — tract, semi-custom and custom. Knowing the distinctions will steer you to the type of builder who will be most appropriate for you. This will guide the selection process so that a comparison of prospective builders will yield “apples-to-apples” result.

A cost-per-square-foot baseline is a useful initiation point as the distinct genres of builders are explored. Let’s look at the three major classifications, starting with the tract builder, exploring base price, design parameters and features that can affect pricing.

A tract or production-oriented builder will usually offer a number of “set” floor plans with a few optional elevations. Along with this will come a relatively finite set of feature offerings from which you may choose. Some builders offer these with a “builder- ready” property parcel included within the price. Others may offer these “on your lot”. This is one of the major factors that will affect the cost per foot between tract builders, as property costs will obviously skew the average. While this is intuitively easy to understand, it can be hard to separate the land value in order to compare bids accurately. Many production builders own the entire subdivision where the properties sit; thus they can influence the regulations for architectural control and ensure that these are commensurate with the goal of minimizing production costs.

These builders’ home plans may have a few different layout options, and it may be possible for you to minimally customize a few features. You may, for example, be able to change an interior door location, or opt to turn a carpeted floor into one with a laminate or tile floor. In general, however, the production builder does not want to customize plans to any great degree as doing so will drive up the price.

It is important to note that these production-style homes have been engineered for economy. The builder will offer a plan that features large room sizes for those that cost the least to build while creating smaller spaces for rooms that are more expensive to build. You can expect kitchens and baths reduced to minimum sizing. Bedrooms and gathering spaces will be more generous.

In addition, the window and door count will be low. Design features, such as ceiling heights and roof complexities, will be as simplified compared to a semi-custom or custom home design. Tract home plans tend to be “boxy” and the focal interest for the elevation is generally enhanced only across the front of the home’s width.

Interior framing is usually straightforward, and ceilings of interest are minimized. The finish materials used, such as wall and trim paint, are adequate, but are usually at the low end of quality (yet easily upgraded). The systems within the home — HVAC, electrical, plumbing, etc. — will be code compliant at minimum – and possibly maximum.

If a property is priced within the package, it is most common to see smaller-sized parcel offerings. The home will be designed to “just fit” the setback requirements, leaving little space for yard development. Driveways and landscaping needs will likely be minimized.

Features and options for the exterior – roofing and siding — and for the interior finishes will be minimized as well. Tract builders often purchase products in bulk to create economies of scale, and they have pre-arranged pricing for labor for these products. For example, it is less expensive to hire a tile setter if he or she is installing 12-inch-square tiles versus 24-inch-square tiles which are more time consuming to set.

Cabinetry may be imported in quantities that will fill a shipping container full of a few standard designs. As a result, your plan may offer the choice between a white painted or singular stained wood door. Certain foreign-made goods are less regulated, and the materials used to make them are often the most economical for the manufacturer to utilize. Tract builders usually offer a fully stocked ‘design center’ that will display a finite offering.

There is one other important consideration in determining whether this least option is right for you. Typically, the relationship between the builder and the client is regulated to a staff member. The actual “builder” or license holder, may live in another city or state.

Next, we’ll explore cost per square foot and other considerations in selecting a semi-custom home builder.