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Question for builders/contractors

tufenhundel | Posted in General Discussion on October 9, 2004 09:03am

Sorry if this question has been already posted.  We are looking for a new house in Indiana.  We were going to go with a spec home on a development, but have since reconsidered building a custom home on a lot instead.

The spec builder was charging ~$85/sqft.  Can anyone tell me what kind of increase ($/sqft) I can expect for a custom builder in this area?  I realize that the lot will have to be studied to see if it is appropriate for construction.

If it is significantly more, that we might have to rethink this plan.  Thanks.

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  1. Handydan | Oct 09, 2004 11:13am | #1

    The word custom will dramatically vary the answer dependent upon what you want built.  If you were extremely easy to please and had a strict budget in mind, it might even be cheaper than the spec, but don't count on it!!  You would have to have plans and specifications to get a good guess, and even that will vary a lot depending on location and market conditions.  If you have a lot and floorplan picked out, see if you can  get a builder to at least ballpark the cost, to see if it is within reason, but be prepared for lots of decisions that will all affect the cost.  Good luck!!

    Dan

  2. Piffin | Oct 09, 2004 03:27pm | #2

    maybe you should be considering the diff between quality and economy builders instead of custom and spec. to look at what you get for your money.

    There are good quality spec builders and porr quality custom...

     

     

    Welcome to the
    Taunton University of
    Knowledge FHB Campus at Breaktime.
     where ...
    Excellence is its own reward!

  3. JackGill | Oct 09, 2004 04:26pm | #3

    I'm not a builder but recently built my own custom home in Spring Grove IL.  I doubt anyone can answer your question for the reasons already mentioned, there are many, many variables, not the least of which is the definition of custom.  I would suggest however that you do not focus on a square foot price, what you're probably more concerned with is the total cost of the project.  One thing you might be able to do is to cut back on the size of the home by eliminating space you don't care for.  For example, many homes in my area have formal living and dining rooms, plus a family room and breakfast nook.  We eliminated the formal living room and breakfast nook.  Another cost saver can be a large pantry, with less cabinets in the kitchen.  You get the idea, the key is having the right architect.  One caution though, when you're making the decisions on everything, such as doors, trim, etc, you'll probably go with better quality than the spec. homes, and thereby run up your total. 

    Good Luck

  4. andybuildz | Oct 09, 2004 06:38pm | #4

    Hire an archy and a financial planner that deals in this in your area.

    Too many variables here.

    Be well erected : )~

    andy

    The secret of Zen in two words is, "Not always so"!

    http://CLIFFORDRENOVATIONS.COM

    1. tufenhundel | Oct 10, 2004 06:17am | #8

      I do realize there a lot of variables.  I was wondering that from a builder's point of view, if there are differences in cost due to just a unique plan.  I was told that because a builder of spec homes does it in quantity, there there is a cost advantage in terms of labor.  My web research also shows the industry differentiating between spec and custom builders.

      At some point, the archy will come on board.  Just wanted to know if there are any showstopper before getting to this point.

      Thanks.

      1. FastEddie1 | Oct 10, 2004 06:42am | #10

        Theoretically, the spec buiulder includes some allowance for carrying the home after it is built but before it sells.  If he builds it on contract, then he knows that expense won't happen.  The construction loan may cost him less cuz it will be your interim loan, not his.

        Some spec houses tend to have simple foundations and simple roofs, which cost less than some customs which have multiple offsets in the foundatiuon and multiple valleys on the roof. 

        One suggesstion wouyld be to get a set of plans for a house you like, and ask a builder to price it.  You will need to buy the plans, which could easily cost $500-700, and if you're not committeed to the builder, he might want some money for the time he spends working up a quote.  If you do have him build for you, you might get a credit for the proposal cost.

        Whenever you are asked if you can do a job, tell'em "Certainly, I can!"  Then get busy and find out how to do it.  T. Roosevelt

  5. DougU | Oct 10, 2004 01:03am | #5

    Read what Piffin says, short but to the point.

    1. Piffin | Oct 10, 2004 01:28am | #6

      next thing ya know, mothers will be telling their children to just do like piffin... 

       

      Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!

      1. IronHelix | Oct 10, 2004 02:31am | #7

        And when they grow up....what will they be like?

        A vision of horror....thousands of piffins.........  ;>)

        .............Iron Helix (FOS)

      2. seeyou | Oct 10, 2004 01:43pm | #11

        Mama's, don't let your babies grow up to be Piffens

        They'll grow chip strap beards

        and live on an island and............

        Wait a minute  --  none of this rhymes.  Never mind.

        I invented both kinds - country and western.

  6. alwaysoverbudget | Oct 10, 2004 06:37am | #9

    well you can figure 10% more just because your hiring a archy.thats kinda the going rate here for there services. i' got a good friend that does nothing but spec houses. average out at 1700 sf with basements. he tells me it takes about 8-10 houses of the same floor plan to get all the bugs worked out and have everything flow well and go together right. if thats true {and i can pretty much agree going by my projects that it takes a few to get it right} all those problem solving moments are on your clock. i think the smartest thing i ever read about building a new house was " before you start go buy your front doorknob, if you buy the nicest,most expensive one  your going to go way overbudget. by the way going by my sign on name you can tell i didn't take that advice! larry

  7. dIrishInMe | Oct 10, 2004 03:15pm | #12

    Let's talk terminology for a minute.

    A spec house is a house that is built with no buyer signed on to purchase the house.  From a builder's point of view, in an ideal world,  The house is sold the day the CO (Certificate of Occupancy) is issued by the local inspections department to some buyer who just happens to show up at exactly the right  time.  (CO may go by different names in different states/providences/etc).  In this case, the buyer picks out nothing.  A variation on this time table might be the buyer signs a contract when the house is, maybe 1/2 done, and picks out the carpet, interior paint colors, tile etc.  Another variation might be that the house is finished and sits un-occupied for 3 months during which time the builder has to make the loan payments - this money comes right out of his profit. 

    So, a spec builder, by definition is one that builds all his houses without a buyer signed on.  No presales.  (A presale is when a contract is signed before the house is started) Custom homes can be spec homes, it's just that the builder picks/draws/etc the plans, and builds the house to his specifications. 

    A custom home is one that has many of the details specified by the owner, and is largely one of a kind - or at least the only one that builder has built.  Builders do re-use plans, and I guess the house is still considered a custom until it gets to the point where there are several houses using the same floor plan in a particular subdivision.  The "owner" could still be the builder - in which case the custom home would also be a spec home. 

    New term: Tract builder - a builder who builds many houses utilizing a limited number of floor plans.  Sometimes called a production builder.  So, he builds a neighborhood with 100 houses, but only 10 floor plans.  Maybe each floor plan could have 5 different facades (fronts).  So theoretically, there could only be 2 houses out of a hundred that look the same from the street.  Typically, these type builders don't allow the buyer (in the case of a pre-sale) to make a lot of changes - maybe add a screened porch, larger deck, or make the garage stick out 4 feet further, but not modify the basic shape of the house.  Presale buyers still get to pick out floor coverings, cabinets, counter tops, etc, so the house is built for them, but by virtue of the fact that there are a number of other houses in the neighborhood with the same floor plan, it is not a custom.  Most often a tract builder takes these same sets of floor plans to another neighborhood and does the same thing again.  He may be a national builder that utilizes the same floor plans in the entire mid west - for example. 

    So, my question to you is this:  Are you talking about production/tract houses vs custom houses, or you actually asking about the prices of spec houses (prebuilt houses) vs a house that is custom built for one owner?
     

    Matt



    Edited 10/10/2004 8:33 am ET by DIRISHINME

    1. tufenhundel | Oct 10, 2004 10:59pm | #14

      I think you explained it right.  I was talking about a tract builder.  This builder could modify the plan for us before construction begins.  But there was a limited number of plans.  We would like something more distictive, more character.

      Thanks for learning me.

      1. dIrishInMe | Oct 11, 2004 02:21pm | #15

        Here is a couple of things to think about.

        Tract builders are able to deliver the most square footage for the money.  They do this (generally) in a number of ways:

        1) By getting materials cheaper.  When a tract builder representative goes to the lumber yard and says "I need lumber for 100 houses", he is gonna get the best price possible.  Not that "deep discounts" are really available in the lumber business, but still Mr Tract is gonna get it for less than anyone else.  When a custom builder goes to the lumber yard, he will got a discount, but my experience is that the discounted price ends up being similar to what Joe Blow can buy stuff for at the big box store.  BTW - big box stores generally don't get builders business for several reasons.

        2) By paying subcontractor's less.  Tract builders can pay less because they can offer a subcontractor months worth of work, rather than just the week or 2 that a custom builder can offer.

        3) Since tract builders build the same house many times, they have the hole building process more "dialed in" for that particular house.  Less material waste due to over orders.  Less problems with subcontractors, since they have the same guys doing the same thing over and over again.  Etc, etc 

        4) Tract builders get land cheaper.  A custom builder is topically buying a few finished lots, and probably can't negotiate on price.  A tract builder, again, gets volume discounts, or maybe even writes his own ticket by doing his own land development.  The tract builder has the financial backing to go buy a 75 acre tract and develop it.  Of coarse, the by product of this is that tract lots are generally as small as possible to fit the size of houses that the tract is to contain.

        5) I think tract builder's are better at "knowing what they can get away with".  For example, here in NC, non load bearing partition walls can be built with studs on 24" centers, rather than the normal 16" centers.  It may not make sense for a custom builder to save $40 on a house by doing this.  On the other hand, if a tract builder saves $40 per unit, and builds 100 units, that is a nice addition to the bottom line.

        So, my SWAG is that if a tract builder and a custom builder were to build the exact same house on the same sized lot, the tract builder's house would be roughly 10% cheaper.

        Of coarse, for a custom builder to built a tract style house wouldn't make total sense.  Generally, custom houses have larger lots, and at least a few nice features that wouldn't normally be found on a tract home, and hopefully have better some better quality of construction - no partition walls on 24" centers.  And as you stated, the owner gets a little individuality out of the deal too.  Now you get into extra money for custom plans.  After adding these things and more, now we start getting to the point where a custom house may be 15 to 20% more expensive, or maybe even more... - if you want to look at it from a purely square footage standpoint.

        Tract builders cater to the "average" home buyer of today, and deliver what the market demands.  Cheap square footage with a nice paint job and a few extra pieces of molding and the home buyer is happy.  The average office worker of today may not even know 16" centers from 24" centers, nor does he care.   He wants the most (quantity) for his money, with reasonable quality - which could in deed be perceived as a good value.  Depends on what the individual values, and can afford. BTW - I think everyone knew what you meant by spec builder, but I wasn't willing to replicate the inaccurate terminology.

        Matt

        Edited 10/11/2004 7:43 am ET by DIRISHINME

        1. tufenhundel | Oct 11, 2004 09:32pm | #16

          Excellent!

          "So, my SWAG is that if a tract builder and a custom builder were to build the exact same house on the same sized lot, the tract builder's house would be roughly 10% cheaper."

          This is useful.

          1. Isamemon | Oct 11, 2004 10:24pm | #18

            now this little story comes from my older  brother (s.e virginia) who only builds customs and no longer compromises or tries to do specials favors or deals by going into a custom under 125 a sq starting,  the owner gets exactly whats in the contract and plans, nothing more or less without enforcable change orders. He has been building since 1968

            this came up at a family meeting. goes something like this

            .........................

            I think another difference that may not have been pointed out is quality and "gingerbread"

            a lot of homes I see built  and potential new owners see have lots of "gingerbread" or frilly stuff to look impressive, but inner quality might be off. in some cases way off.

            another item is that a person looks at a lot of these gingerbread homes and does not notice 100 tubes of caulking in them before painting yet they look good from the street

            they ask a quality builder to do them a favor and build a home at tract prices , or your case 85 a sq ft. you find a builder that says, dragging his feet, yes I can do it.

            He builds you a quality unit, strong, square, plumb

            and then you drag your feet because it does not have the fancy touches or gingerbread the other could offer

            your dragging feet, money hold outs casue him to sacrifice profit ( his wages) to get you what you want, baically a custom $150 a sq ft home at 85 a sq ft

            he walsk away when the job is finihsed feeling ripped off, regretting he ever met you

            you walk away feeling you got what you wanted anyway and that he is a bad builder who tried to take advantage of you

            so I guess ........... know exactly what you want as far as frilly gingerbread.........quality or quantity

            my brother has a sign in his office that says

            __________________

            Pick one:

            cheap

            fast

            Quality

            ________________________

            if you dont have a builder or plan yet, get pictures of what you want the outside of th ehosue to look like, get floor plan idea, and know what you are willing to give up for what you ultimately want

          2. tufenhundel | Oct 12, 2004 03:49am | #19

            I hope I wasn't implying that I was going to try to get a custom home at tract prices.  I know about the gingerbread frills.  That's why I wasn't too impressed with a tract home we originally looked at...alot of frilly foo foo stuff.

            For your brother's price in SE Virgina, do you know how it compares for the region?

        2. JohnT8 | Oct 11, 2004 09:38pm | #17

          So, my SWAG is that if a tract builder and a custom builder were to build the exact same house on the same sized lot, the tract builder's house would be roughly 10% cheaper.

          And it is anybody's guess who keeps the 10%  ;)jt8

  8. blue_eyed_devil | Oct 10, 2004 05:17pm | #13

    Theres no hard and fast rule Tuffenhundel.

    You might pay less for more, or more for less, in either situation.

    You have to get out of the car and look at the products that each is offering. Then do the paperwork homework. Compare the comparables.

    If you provide the plans, and get exactly the same quote on the same plans and specs, you'll still have a tough judgment call.

    Good luck.

    blue

    If you want to read a fancy personal signature...  go read someone else's post.

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