CUSTOM vs SPEC vs TRACT
There are important differences between custom homes, spec homes, and tract homes and many people use the terms interchangeably. A potential purchaser must distinguish between the three by weighing the pros and cons offered by each.
CUSTOM
A “Custom” home is the term used to describe a home built to the specifications of an individual purchaser. These homes include the personal taste and needs of the purchaser. They have more control over items such as floor plan, color selection, choice of lot, materials, as well as fixtures included in the finished home. All of the choices are made within the purchasers budget. It is the purchasers obligation to choose items within that budget.
Many purchasers prefer to build a custom home because they have much more control on the finished product. While they do not perform the physical work, they are able to see the progress daily. Many find it fun, while others consider it scary. This is where the choice of builder makes a difference as a good relationship between purchaser and builder can make things go more smoothly and achieve the desired result. It pays to investigate the builder and get to know them as the relationship will need both sides to be hones and fair and trust each other.
Pros – The purchaser controls the lot location and have input with the floor plan and may choose how many rooms and amenities to add to suit their needs. Through these choices they control the final price as well as achieving a level of satisfaction with the process and the finished home.
Cons – Many people feel that there is much uncertainty with the process in building a custom home. Too many “ifs.” If I can find the right builder. If I can find the right floor plan. If it can be built on my schedule. If I will be satisfied with the finished home. Their alternative is purchasing an existing home and they see what they were buying when they signed on the dotted line. Some see it as a daunting task and proceed with the process anyway while others see it as a fun process and enjoy it immensly.
SPEC
“Spec” is the term used to describe when a builder builds a home, or is in the process of building a home, while speculating that he can find a purchaser. Build it, and they will come…and buy it. For these homes not yet complete, there is an opportunity for someone to add their selection for paint, tile, carpet, and more to the home before completion. This may be a viable alternative for someone wanting a new build, but not wanting to go through the entire building process. However, the builder will most likely be appealing to broadest market possible so there is not as much choice in a spec home as there is in a custom home.
Many builders enjoy working with purchasers while others may concentrate on building spec homes without the added complication of needing to work with purchasers. Still others have no preference.
Pros – Spec homes are a fairly safe investment, depending upon the builder. Usually, they are fairly well done, with a fair amount of amenities and upgrades, in good locations and because of the experience of the builder, marketable. Spec homes are almost always available for immediate occupancy. These elements help the builder maintain and enhance their reputation. Like resale homes, the purchaser can see what they are getting when they sign on the dotted line.
Cons – As with resale homes, many of the upgrades and amemities will be generic and may be difficult to adapt to a purchasers preferences and lifestyle. Many of which the purchaser may want to change after the sale even though they were included in the purchase price. This makes it beneficial to find one early in the process.
TRACT
“Tract Homes” are those with similar style and floor plan to others around it. An example would be three bed, two bath, ranch style. They are generally built in volume and can be delivered at a lower price per square foot. The builder can buy in volume and with little variation in construction, experienced crews can build them faster. Often, price is the best selling point for tract homes. The more customized a home is the more expensive the labor and materials become.
Pros – The builders in this case are appealing to the largest market it can so customization is minimal. The fact that a similar house will be built next door may be pleasing to some and the surrounding houses in the neighborhood will likely build quickly.
Cons – The major decision here will be one of quality v. investment. One may see where money was saved by the type of cabinets or flooring or other material that has been chosen. Often, the differences are not apparent to the typical buyer. However, a tract home resale value may not hold as well because of the possibility of competion from other similar homes in the neighborhood.
Many purchasers will have their needs met by tract homes, especially a first time homebuyers. They can be a steppingstone for many but not a good vehicle for a short term investment. Although, for long term, it can be a sound investment.