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.