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Buying a new home is exciting. It’s fun looking at models, viewing home plans on all of the home plan sites, and checking out the latest styles and designs on HGTV or Houzz. All of this makes buying a home a thrilling experience as you explore the options that you have. Still, many home buyers don’t understand some of the basic differences in the home building industry. One of those that is most often misunderstood is: “What’s the difference between a production builder and a custom builder?” There is actually a huge difference between the two when it comes to determining what you can get in your home, the process to get it, and the timeframe you will get it in.
What is a Production Builder?
According to the National Association of Home Builders (NAHB), a production home builder builds in communities. They own the land the home is being built on. They develop a community and have a say in how that community is built and managed. There is usually a model home, or maybe more, in each community.
In the past, other names for a production home were tract homes or cookie-cutter homes. Production builders have worked hard to overcome some of the negative stereotypes because of the lack of variation in plans and communities. Today, a production builder selects a handful of home plans that they will offer in the community and a then offers a few options for upgrades such as in the kitchen, the master bath, or maybe even a finished basement. When it comes to choosing options in the home, they usually have a defined catalog of products that a buyer can choose from to customize their selections. In some cases, the home may already be built and all you have to do is view, choose, and buy.
What is a Custom Home Builder?
The NAHB notes that custom homes are one-of-a-kind creations that stand out in a crowd. While that is certainly the case for many custom homes, that is not the case every time. For many, a custom home means getting what they want, not what they are told they can have. Another main point is that custom homes are built on land that is typically already owned by the home buyer or is about to be purchased by the home buyer.
Because the homes are custom built to a buyers plan, home can be built from unique plans and provided virtually anywhere. They are can reflect the location in which they are being built and the unique style of the home buyer. Depending on the custom home builder chosen to provide the home, a home buyer may choose from almost any material, any product, and any style they want. The options can be virtually unlimited! The process of building a custom home can take time, in some cases nine months to a year from starting the process until you actually can move in.
How Do I Choose the Type of Builder that is Right for Me?
Both types of builders can be a great fit for a home buyer, depending on the options you want and where you want to build. It will come down to home how many decisions you want to make, the lifestyle you want, and the location where you will build. Here are some key areas to consider when choosing between the two:
Financing – When you build a home with a production builder they own the land your home is to be built on. They work with you to get a mortgage/loan in place and when the home is completed, you close your loan and move in.
With a custom home, it is different. There is typically a two-step process. First, you get what is called a construction loan. This loan covers the purchase of the land (if it isn’t owned already) and then pays the builder through a draw process. You make principal and interest payments only on the loan during the construction process. The builder does work in stages and he is paid for that work at the end of each stage. At the end he is paid in full upon the completion of the home with the balance left in the construction loan account. At that point, the construction loan is converted to the conventional mortgage that most people are familiar with.
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Timeframe – Production homes can move quickly. In some cases, you can buy a prebuilt home and move in within 30-60 days. In other cases, you pick your lot, choose your colors and are moving in within 3-6 months. The production builder already owns the land, the roads are in, and the utilities are at the site. Having these items streamlines the production building process.
If you want custom, it takes a little more time. You may have to find the building site if you don’t already own it. You have to choose your plan and choose your colors and then you start to build. The custom home building process will take 6-12 months. For larger and more complex homes that can even be longer.
Get the Home you Want – With a production home, it can’t be custom. However, it can be “customized” To start, you can choose within a defined group of plans within a community. Those plans typically have a few options for some rooms or bump outs. You can then customize the home with color selections.
With a custom home you get exactly that, custom. However, custom means lots of decisions! With a production home, you may only have 20 or 30 colors or options to choose from. With a custom home, the choices can be virtually unlimited. While you can have anything you want, the custom home conundrum is that you can have anything you want. Focusing on what is important to you can help you avoid the delays that are inevitable when too many decisions have to be made.
Your Land or Their Land – When you build with a production builder, they only build on their land. The whole system is designed to work on land that they own. Their subcontractors and processes only work efficiently when building in their community. You can typically choose a lot in one of their communities but you can’t go to them already owning your land and have them build for you.
With a custom home builder, building on a scattered lot or on land you already own is what they do. They are set up to build homes where the land is. They are adept at bringing in utility connections, building driveways, and working through the custom home building process. They have suppliers that can get just about any material or product a customer wants. They understand what it takes to build a unique home each and every time.
You Can Have it Both Ways with a Custom Modular Home
Most custom modular homes are built on a customer’s lot or one they are about to own. However, don’t confuse custom with the term expensive. Modular homes concentrate much of the work that needs to be done to create a custom home in a factory. You can get a custom home at a superior value and with the enhanced quality that building indoors provides using the modular construction process.
In many cases, you can get the advantages of building a modular home in an already established community. Many land developers are now opening up their communities to outside builders. When that happens, you get a home site that already has many of the features needed to build a new home. The utilities, roadways, and site prep may already be done. The advantage of a custom modular home is that while the remainder of the work that needs to be done onsite is taking place, your custom home is being built in the factory. This streamlined process allows you to get custom quicker! Be sure to explore all of your options when it’s time to build your new home!
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