Is a Custom Home Right For You?

So you want to build a ‘custom home’ - but what does that really mean?

There are 3 main types of residential new construction - Production, Custom and Semi-Custom. Here’s a breakdown of each type of build.

Production style or ‘tract’ homes are typically a development where rows and rows of similar homes are built from a single or a few select plans. A buyer may get to choose from ‘Plan A, B or C’ with minimal choices for finishes. All the main items are pre-determined by the developer or builder, and in most instances, these homes are built to maximize profit, so oftentimes corners are cut in favour of cost savings. In this sort of build the comfort of the end user is typically not at the forefront of the builder/developer’s mind.

These sorts of developments play an important role in helping to add supply to the housing market, and are often built in a short timeframe, so occupancy is fast. They are typically the most cost-effective way to get into a new single-family dwelling. 

A fully custom home on the other hand, is designed from scratch. A buyer meets with an architect, builder and possibly a design team, to do a deep dive into their needs and wants, including how their family will use the home, their budget for the build and many other considerations. In some cases, a lot is purchased that will work for the design they have in mind, and other times they may already have a lot and the design is tailored to it to maximize the views, topography etc. With a custom build the buyer gets to select every single finish and fixture that goes into the home. The final price of the home will be a reflection of the choices they make. For the average family home, the design decisions required run into the thousands, so having an experienced designer whose style reflects their own is an important factor. The more decisions that are made during the pre-construction phase of the project, the better control they have over the budget.  

A typical pre-construction phase for a fully custom home can be anywhere from 6-12 months, and possibly more depending on the size and complexity of the build. These builds usually take longer during construction, and they are more challenging to budget for, as this is the very first time this home has been built. Even though the techniques and systems used to get to the finished product are tried and true, it’s like putting together a puzzle, and there must be some allowance made for the ‘figuring out’ of how it all goes together.

When planning a fully custom home, we strongly suggest having a contingency in mind, as the chances of cost overruns are often higher. One huge benefit of building a fully custom home, is that you get exactly that – a home that is tailored exactly to your lifestyle. Additionally, the resale value on a fully custom home will likely be better than on a production style home.

Finally, a hybrid between a production home and a custom home is the semi-custom home. The buyer starts out with one of the builder/developer plans, where they get to make some selections, and there are some items that the builder or developer will pre-determine. These homes are built faster, and typically for less than a fully custom home. There may be opportunities to manipulate the floor plan, the finishes and fixtures, and possibly upgrade the insulation or window package, but the bulk of the building envelope will be decided by the builder.

In most scenarios, the predetermined items will be a fixed price, and the changes/modifications made will be subject to change orders. Change orders are an agreed upon arrangement for the amount charged to swap out an item. For example, a buyer swaps the floor plan on the upper level from 3 bedrooms and a bathroom to 2 bedrooms and 2 ensuites. The builder/developer will prepare a change order stating how much they will add to the build price to cover this upgrade. The change order gets signed off, and things move forward. The tricky thing about these change orders is that some less reputable builders will take advantage of change orders to make a profit on an otherwise very low profit build model.  It can work well if the buyer makes minimal changes, but if they attempt to tailor the home to their tastes and lifestyle, the risk of adding big costs by way of change orders can be a slippery slope. In order to maximise a budget with a semi-custom home it is important for the buyer to know any and all changes they may want to make from the outset, and to be sure to fully understand the contract before signing one. 

Building a home is hard work and there is a lot to consider no matter what type of home you choose to build. Having an open and trusting relationship with your home builder/developer is paramount in each scenario described. Doing the research to find one that you are completely comfortable working with and who aligns with your goals and dreams is an important early step of the process.