My wife and I are considering moving to a new home in Mansfield. The tract homes being built go for ~$90-100/sq ft (the one we want is priced at $98). I contacted a custom builder who had a nice half acre lot and he said I should expect his cost to be $118-$130/ft. That is a huge difference. On a 3000 sq ft home that is $75k. Now, he is going to include a little more garage and patio space and he claims his home will be much more energy efficient. Throw in that his is a half acre lot and all of that might be worth $25-50k. Are the tract home builders just that much more efficient than the custom builders or am I missing something here?

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Are the tract home builders just that much more efficient than the custom builders or am I missing something here?

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building a one off is much more expensive than building entire phases in a master planned community. You have economies of scale and the fact that they have likely had the plan built and approved for that particular lot a ton of times. Fewer changes to the standard design equals faster construction times and fewer surprises.

As a roofer, would you give a better price to a production builder that could guarantee you x number of homes per month with no surprises as far as design and materials or a one-off custom home?

[This message has been edited by Diggity (edited 4/3/2014 2:33p).]

Goose, with the limited info you provided, the custom choice is the obvious choice.

How so? I can get 95% of my wish list from the tract home for $350k and to get 100% of my wish list from the custom guy I'll spend another $100k. That last 5% being a bigger lot, bigger garage and bigger patio. I might be able to save some money on the custom side going with a smaller floor plan but I have looked at hubdreds of floor plans now and I keep coming back to the tract home floor plan going for $350k as my favorite. Unfortunately it's 3600 sq ft...

Because of the intrinsic value, satisfaction, and overall happiness you will gain. Based upon your response, I bet you were an economics or finance major (I was econ so please do not take offense).

Its all about what is important to you as the owner. I'm a few years older than you and speak from experience having gone both routes. In October we completed a "tract home" with so many upgrades and floor plan changes it was custom for all practical purposes. However, it is what you "cannot see" that is the difference. Quality in insulation, cabinet quality, molding/trim size and selection, etc. etc.

Again it is your money. I would highly suggest you spend the extra cash and go plan B. You can thank me in about a year.

[This message has been edited by BoDog (edited 4/4/2014 7:05a).]

From someone in the building materials industry, please do your homework and check the quality.

First, you need to make sure you are comparing apples to apples. Are the interior finishes on the tract home comparable to those by the custom builder? Things like cabinets, flooring, granite, light fixtures, appliances, etc. If the custom builder uses higher grades as his "standard" then a lot of the money could be taken up there.

Also, is the tract home already built? Even with tract homes, there can be a big difference between spec homes and "custom" tract homes that are built for you. Some tract builders won't change anything once they've started construction on a spec home (even if the particular item you want changed has not been installed) but others will. What they really want is for you to do a "custom" build and end up at their design center because you aren't satisfied with their "standard" grade options. You get to the design center and see all of the bells and whistles (and how crummy the "standard" options look next to the upgrades), and all of a sudden you're spending an extra $25k-$50k.

I think it's a lot safer to go with the builder who quotes you the price per square foot that already includes most of the upgrades you want, rather than ending up adding upgrades to a low-ball quote.

There is a lot of potential benefit to having the nicer lot, especially if you ever have to resale.

If you're someone who will want a bigger lot at some point, go for the bigger lot.

You can change upgrades if money is an issue up front, but you really can't change the location of your house. I love my house but hate my lot, and it's probably that reason that I will leave my house sooner than I would if the lot was bigger.

Interesting thoughts. To some extent I figured the custom builder's explanations for his high price being that he used higher end "standards", better foundation, and better insulation was marketing bull*** for the most part. It seems those on here would say that is typically true of a custom builder.

To the last posters point about the larger lot being nice for resale - I would probably agree to some extent but ultimately disagree. At the end of the day people look at comps. The comps are going to be tract homes that were built for $75-100k less and therefore the sellers are willing to sell for less and the comps are set at a level far below the custom build. I have never seen a comp where the realtor did a lot size adjustment. I have seen pool adjustments and that is about it. Just like If I go spend $20k putting fancy shutters in, I won't be getting that back at resale. If I spend $10k putting in upgraded insulation, not getting that back. An oversized patio that runs me $10-20k certainly isn't going to get 100% back (neither does a pool). Even the 3 car garage won't get you a return on your money. So basically, everything I am paying for in the custom build, I do not get back in resale at a 100% clip.

I guess what that says is that the tract home builders know all of this and thats why they don't put in these features. They don't get a return on their investment.

Besides just square footage, you are comparing apples to oranges IMO. The additional garage & patio are additional covered square footages and there is definitely a cost associated with those even if the living footage does not change. 3000 sqft house with 2 car garage and small patio could be quite a bit less than 3000sqft house with 3 car garage and large patio.

Lot cost could also be dramatically different as track builders purchase blocks or sections of lots at a time and are typically less than a community that allows for custom building. Custom building/custom communities also tend to hold their value better and appreciate quicker than track communities.

Now for trying to compare building techniques and materials. You really have to look at the nuts and bolts of the materials, contractors, and quality of construction. What type of exterior walls(2x4 or 2x6), windows, insulation, HVAC, plumbing? What are the rafter, joist and exterior stud spacing? What type of exterior sheathing? What are the allowances (which in track building you are probably not even getting allowances but simply "levels" of stuff to choose from so option A, B, or C where in custom there are limit to options)? Light fixtures, plumbing fixtures, sinks? Cabinet - cabinet wood species, cabinet style, type of cabinets being built and material being used, drawer glides, ect. What type and finish of paint, how many interior colors are you getting, what type of texture? The list literally can go on and on with interior finishes and features.

Larger lot also can mean more driveway and flatwork, more grading, sod, irrigation and landscape.

Are utilities and tap fees that same on both lots? Are POA/ACC plan check fees or deposits the same? Permits for both lots the same?

It all factors in.

I am a custom builder and I am slightly biased but majority of our clients have come from a track home at some point and they truly see the difference in quality of construction and materials. As well as having the opportunity to interact and have input on entire construction process.

What you are saying about the upgrades, including to some extent the lot, is essentially true. However, how it can help is with resale. For example, I did a semi-custom build on one of the nicest lots in the subdivision where I used to live. The builder (a small, local builder) did not charge a "lot premium." When I had to unexpectedly sell less than two years later, my lot was a BIG selling point. It was significantly larger than most of the other lots in the 'hood and it backed up to a green space. The people who bought the house could have gotten something in the 'hood for less $$ (or even in another development), but they really wanted the premium lot. Same thing with upgrades - there are some that have a lot more value than others (for example, HW floors and a 3rd car garage), and a GOOD appraiser, realtor, and knowledgable buyer should take this into consideration when considering comps.

As someone who did have to resell a "semi-custom" not long after buying it, it can be a real PITA, especially if there is still new spec construction to compete with. But, if you can do something that sets your house apart from all of the others, that will certainly make your house more desireable and, depending on the upgrades, help your house at least hold its value, should you have to sell.

Here in Harris County, nicer lots do sell for a premium and the county even asseses the value of the lot based on size, so here you sort of have a case for asking more for a house on nicer lot. In Brazos County, all of the lots in my old subdivision were valued the same by the CAD. However, I was able to successfully get my appraisal modified when I purchased the house because the appraiser significantly undervalued the lot compared to what my builder paid for it. My point here is that lot value is VERY subjective, so it might be worth doing a little homework to see how it is handled in the area you are interested in.

[This message has been edited by TXTransplant (edited 4/4/2014 8:47a).]

Also consider the differences in neighborhoods of a tract home neighborhood vs a more custom home neighborhood. I'm nowhere near knowledgable on that, but it's something to keep in mind and was mentioned above, as well.

[This message has been edited by Natasha Romanoff (edited 4/4/2014 8:44a).]

I have a friend who was a superintendent for a big production builder in DFW area. His bosses told him as long as the forms were within 4", pour the slab. Good grief.

Certainly not all tract builders are that bad. But again, research the quality.

We currently live in a tract starter home and are building a custom home. We first contacted our builder 14 months ago after we went under contract on the land. In that time an entirely new subdivision of tract homes has been pretty much completed around the corner from where we currently live. I must say, after actually seeing the process up close for both types of builds and living in a tract home, I don't think I'd ever live in a tract home again. I absolutely would never build one. The difference in quality, both materials and workmanship, is night and day. Ask to tour homes from each type of build at various points in construction. And be sure to have them point out everything that is standard and everything that is an upgrade. The list of things our builder does as a standard would be considered upgrades by tract builders if they even could do it at all.

And things like insulation or window brand may not have a big impact on resale but it does affect you while you are living there. It is your HOME. You should be comfortable and happy in your HOME. We are nearly doubling our square footage but expect to have utility bills lower than our current home.

Alpha Bean is dead on.

Very safe to say you should be getting far more value for every dollar with a custom built vis-a-vis tract.

When I used to talk to tract builders about providing materials, price was pretty much the only consideration. Or, I had to win the lowest price battle before any further discussion.