So you are considering building a new custom home and you are trying to determine what Houston custom builders to interview for your project. Much like many other professionals such as engineers, lawyers and doctors, there are different construction specialty types of Houston custom builders. The key to successfully selecting the professional category that best reflects your needs is to have a fundamental understanding of what your home building requirements will be. This article will provide you some direction of which home builders category you should be focusing on.
The general category for Houston home builders is a large and diverse group of professional businesses. The three principal Houston home builders categories can be classified as production builders, semi custom builders and custom builders.
Production Home Builders
Production builders (formally known as tract builders) can be classified as typically larger builders that regionally and locally build homes from stock plans that they have developed to represent their product lines. This by far is the largest home builder segment in the industry. The prices for these types of Houston home builders can range from $100″s to $300’s in Houston Texas.
Production builders will generally offer their products on larger pieces of land called community developments and will be located 20 to 40 minutes outside the Houston metro area, where land prices are more cost effective then the metro area. Their services are typically narrowly defined to a group of pre-determined product selections to choose from and restricted to the neighborhood locations that the builder constructs his product. Generally, the higher the price, the more product selections that will be offered to buyers.
Semi-Custom Homes Builders
The second largest group of home builders can be referred to as the semi-custom home builders. This group can broadly be described in two different business models. The first semi-custom business model will typically build a product from various pre designed plans, but will offer a larger range of product selections. They will operate much like a production builder by constructing spec homes at preset prices, but will have unique architectural features that warrant high end prices.
This second type of semi-custom home builders will commonly operate with a group of predesigned home plans, but will allow customers to make changes to the plan under contract. They will typically restrict the types of changes such as structural modifications or exterior elevation changes, but will allow interior walls to be moved to accommodate the client. The price range for semi-custom builders is from $300’s to $1M depending on the cost of the land. In metro Houston the price of the building site can reflect upwards of 50% of the sales price.
Houston Custom Builders
Houston custom builders classifications are the smallest of the Houston home builders groups, but are likely to vary the greatest amount in business model actives and size. Houston custom builders can range in service and product offerings from $800’s to $5M+. Their business practices vary dramatically in their processes and their organizational size. We will discuss some of the common custom home builder business offering practices, but will find that this groups common practices fluidly shift to accommodate their changing local clients demographics needs.
The common factor that defines this classification of home builders is the unique nature of their one of a kind home products. Although there are custom home builders that have predesigned home plans that they will modify to the buyers personal taste, this builder category is commonly associated with unique designed homes that reflect the owners lifestyle and personal needs. So let’s look at the common practices of a Houston custom builders product offering practices.
Spec Custom Builders – This traditional business practice is when Houston home builders buys a specific building site for the purpose of designing and building a home for future sale. After some research and serious head scratching the custom builder will commission a design team to prepare a unique luxury home plan that fits the neighborhood and will appeal to a targeted home buyer. They will often enlist the services of a real estate broker to prepare a pre-completion marketing plan to offer the property during home construction.
Bid to Build Builders – The most common traditional business practice of Houston custom builders, is to work with a small group of specific architects that will invite the builders to meet with clients to bid home plans newly designed. The owner is still required to vet the custom builders but will be greatly influenced by the recommendations of their architect.
Depending on the designer / builder relationship and the complete scope of design documents that are prepared by the design team, these relationships can test the owners patience and budget expectations. If the documents are incomplete or have gaps due to the design team’s specifications, the bids and allowance schedules can have large spreads in different total dollar amounts. This makes it challenging for the owner to compare apples to apples. It also makes it difficult for the owner to build a trusting relationship with the custom builder. This is a critical point in developing an effective and constructive working partnership.
On Your Lot Builders – Many Houston custom builders will buy a home site to sell either or both the lot and a custom home to a willing buyer. Due to the lack of available inventory of custom home sites, custom builders will speculate on the perceived market value of a particular future home site. This is similar to the business practice of the spec custom builders, but differs in that the builder that buys the future home site may not build anything on the home site. He can either sell the home site outright or sell to an owner where he builds the home in the future.
Design to Build Custom Builders – This Houston home builders business practice is to facilitate both home design and home construction. This practice is relatively new in luxury home construction and has some distinct advantages over the previous methods discussed. These advantages include the Houston custom builders being responsible for both the design and construction of the home. This reduces the financial exposure for the owner by getting caught with plan design errors or incomplete construction documents.
This process also reduces time associated with redesigning home plans due to the budget overruns. The custom builder provides budget updates throughout the design process. Most importantly, it allows the builder and owner time to develop a functional working relationship.