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Should I build with a National Builder or buy a lot and custom build?

Mitul Patel
January 11, 2019
Hey Houzz Community,

So before I ask my question I will tell you I am super green when it comes to home building. My wife and I are looking to purchase a new construction home in a community from a national builder (ie Highland Homes, Toll Brothers etc) the starting prices for the homes we are looking at are around $600k+for a 4/4 with 4200 Sq FT in TX. The floor plans are beautiful but the standard finishes are far from what I expected $600k can buy. The home comes with standard ceramic tile as flooring, not so impressive lighting etc..hopefully you get the picture. So my question is it is plausible to think that I can buy a lot and build a home around the same price and same size with better finishes...wood flooring, porcelain tile, lighting that I want etc..and I do understand builders make a lot of money on people choosing upgrades. Thanks in advance for any and all help and insight..

Comments (36)

  • robin0919

    IMO....I would stay AWAY from track builder!!!!!. They build as CHEAP as possible to make the MOST profit!! Everybody wants to make the 'most' profit, that's normal. But tract builders go waaaaaaaaaaaaaay beyond that because 'most' people have NO idea what to actually build a house!!! I would spell out exactly what you want including samples of the tile, wood flooring, etc. you want. Toll Brothers are a higher end 'track' builder but they are still a 'track' builder trying to impress' people. It's all marketing BS!!!!!!!!!!!!!!!!!!! I would get several quotes from several local builders. No, I'm I'm not a builder......Yet......Yes, I want to make a profit at a fair market.

  • BT

    Custom will cost you a bit more. Small home builder can obtain the prices available to TollBrothers, nor cheap labor.

  • bry911

    First, there is a thread with over 280 posts right now pointing out that it is "tract" not "track."

    To the OP, no, it is probably not reasonable to expect to build the same house as a tract builder for less money. They are called tract builders because much of their profit comes from buying tracts of land and developing it, houses are often priced close to cost with upgrades and changes being marked up exhorbitantly.

    However, I believe you are asking the wrong question. The question should be for the same amount of money can you get a custom designed and built house that will be better and live better. To which the answer is almost certainly. Siting and some passive solar alone will beat most national builders.

    On the other hand, a custom built home may not be a great investment if you are looking at moving in five years.

  • PRO
    Mark Bischak, Architect

    Look in a mirror and pretend that the home you will build is an accurate reflection of how much you care about your life and your family's life will effect the world . . . because that is what it is.

  • Susie .
    Doubtful that you will get the home with the characteristics you that meet your standards by going with a tract builder. First of all, the location will probably not make you happy. If you are super green, you will probably want a location that makes it easy for you not to use a car - walk and bike to work, school, shopping. Also, will it make you happy to be one of a thousand cookie cutter homes? Coming home every day you pass a dozen homes that look exactly like yours? You can always upgrade the standard finishes, but I’m not sure a tract builder can accommodate your need for LEED certified living.
  • 3pinktrees

    Susie, I could be wrong, but I think the OP meant ‘green’ as in inexperienced, not ‘green’ as in super eco-conscious.

  • MountainView

    I can't compare directly because we moved from a lower COL area to a higher one, but we built with a large regional production builder back in 2015 and had a fairly good experience. We spent a LOT on upgrades because the standard finishes weren't to our liking. After completing the build, we only lived there 2 years because we moved to our new location but we didn't find any real problems but we discovered there was some unusable space (for our lifestyle) that we hadn't realized would be there due to using the builders stock plan.


    We are now working with a true custom builder (only has 5ish houses being worked on at any given time, employs two supervisors total) and had the house designed specifically for us (used a residential designer, not a licensed architect, but definitely did NOT start from a stock plan). While we are still very early in our build, the overall experience has been very different. When I asked about interior wall soundproofing, the custom builder said "yes, we do that standard on all walls". Production builder it was an upgrade. Same with radon mitigation (a common issue in our area). Real stone veneer vs manufactured stone. Get to pick exactly what I want and pay the "cost plus" rather than some inexplicable upgrade charge.


    I can't compare the cost to value, since our new location is about twice the COL compared to the old. But I always believe that it is better to pay more money to get something that will be exactly what you need and will use for a long time vs saving some money and having to work around the imperfections or replace it sooner. YMMV



  • Mitul Patel
    I appreciate everyone taking some time out and giving me insight and things to think about. This is a home that we are looking to live in for an extended period of time if not forever unless something unexpected happens. I can definitely get onboard with building a custom home and totally get it ..you get what you want and what you pay for ..with cutting out anything you don’t ..
  • PRO
    Jeffrey R. Grenz, General Contractor

    Time to dispel another myth: Tract homes always cost less than custom homes.


    Production builders aka "tract" homes are usually delivered at a price point I cannot, especially their basic model without extras/upgrades on the baseline lot.


    Production builders cannot always deliver a custom level home at a price below a custom builder. Why? Their mark ups and overhead costs make up the difference once high end finishes are involved and often exceed a custom build cost.


    If you are considering purchasing a production home, always obtain the price how you want it, always ask about other closings as well as the price of the model as finished. Many times, especially with higher end production, many extras in the model are not offer. Don't be surprised if the model has extras that add 50-120% more than the baseline. That might make you consider a custom home.

  • MountainView

    To add on to what Jeffrey said, our the basic model of our production house was listed as being $382k. Then you add in things like larger garage, 9' ceilings in basement, fully finished basement (normal in our part of the country), upgraded appliance package and you get to the price for construction (before you've gone to the design center to select interior design upgrades.) I think the price at that point was around $430k for us. Then you go to the design center and things really get out of control :) Our final purchase price on the house was $523k, and we did NOT over build for our location (in fact, when we sold less than 2 years later, it sold fairly quickly for 98% of asking price, which was still more than what we paid despite there being new houses still available in the development). Hope this helps to give some perspective. While the numbers I list are specific to my area, it gives you an idea of how the price can really go up with a production/tract builder.

  • Holly Stockley

    Can you build custom for what a production builder can do their base model? No. But, as is pointed out above, when you add in all your desired upgrades, that house will cost you quite a lot more.

    When you build custom, you can also have more control over the design of the house. You might find that you can live larger in a bit less square footage with a well-designed plan. And also tailor things to your family that will mean more to you.

    Cruise these boards and read some of the older threads on custom building, on home design, etc. There are also a few threads on books that are useful when you're thinking about custom building. Research! And start asking around for recommendations for builders and architects to interview and ask some of these questions of THEM.

  • PRO
    Summit Studio Architects

    If you like nice finishes the ultimate cost of the home will be fairly equal between the custom builder and the national builder. However, working with the right custom builder will be a much more pleasant experience.


    This is as much a lifestyle decision as a financial one. What kind of neighborhood do you want to live in? Do you want to live on 10 acres in the country raising chickens and llamas, or on a cut-de-sac with a bunch of other newly arrived families with children who play kickball and ride trikes in the street every day. Both are valid approaches.

  • live_wire_oak

    There is substantially more work for you to design and build a custom home. You have to select your trusted design and build partners, who will help you through the process. The builder doesn't come with the property and 1 of 9 cookie cutter plans tied together. Custom is a lot harder than picking from the Chinese menus columns of preselected "upgrade" choices in a design center, offered by a corporation that you are sure that you DON'T trust..

    If you have your heart set on using a specific wool flatweave carpet in your study, you don't have to rip out the ugly polyester frieze and do it after closing. You get exactly what you want. And what your budget can afford.

    Thats also the drawback of custom. Most people find it difficult to reign in their wants when there are no real limits to the thousands of possibilities. You have to be willing to do the real work of truly understanding your needs. And then separate them from the wants. Then you have to have trust, and to rely on your chosen professionals who understand those thousands of choices for help in narrowing them down.

    That's the real work in custom. Trust. And narrowing your vision enough to not require anti anxiety medication just to select tile for the master bath from 978 white marble look tiles. That is where the vision and trusted experience of your architect and designer come into play to reduce the selections to maybe 5.

  • opaone

    There are longer term bits to consider as well.

    In a declining, flat or slow growing economy the homes in tract developments lose more of their value than other homes. Second to last goes to homes in suburban developments in general.

    In both cases this is due to home designs/finishes that go out of style, lower quality construction that looks worn, requires repair or is not expected to last long, neighborhoods with wide streets and speeding cars that don't feel safe or pleasant, and locations far from daily amenities like schools, groceries, and eateries.

    Location, Location, Location... Over the past 20 years there has been increasing demand for homes that are within safe and comfortable walking or bicycling of daily amenities. This is an increasing issue for tract developments.

    -------

    From a monetary standpoint you are likely far better off finding an existing home that works as is or with minor renovations. You'll get more house for your money and have much better resale.

  • bry911

    Tract and production builders are not exactly the same thing, although I guess the terms have been used interchangeably so much that it is hard to distinguish between the two. Tract builders are specific type of builder that specialize in developing large tracts of land for their builds, they more or less invented the postage stamp sized lots as their profit really comes from developing and sub-dividing land. I guess tract builders are production builders, but production builders are not always tract builders.

    I am somewhat dubious when people say they can beat the price of a tract builder for the same home. I understand the markup that tract builders have on upgrades and how ridiculous it is, but lot and design premiums alone will push up the base price of a custom home. Sure if you upgrade everything you can in a tract home you can push that price beyond the same upgrades in a custom home. However, you still have the appraisal issues to deal with and tracts will appraise where a custom home with the exact same upgraded finishes probably will not.

    I don't like tract homes, but they are a good choice for many buyers. Having said that, I don't think they live very comfortably and at some point you are just trading instant value for long term comfort. Which is the real problem.

  • bry911

    @Opaone

    In a declining, flat or slow growing economy the homes in tract developments lose more of their value than other homes.

    What is your source for this? This is exactly opposite of all the data I have seen. Which is that tract builders create more desirable areas than non-tract. It is essentially your location argument given form. Upscale tracts put so much demographic weight on an area that it becomes a more desirable area.

    In the end, location isn't really based on a physical location but the relative income demographics in an area. Put a thousand $500,000 homes in an area where the average home cost is $250,000 and you are going to create a desirable location. Which is the power that tract builders have, they literally shift shopping, schools, traffic patterns, etc. in communities.

  • Holly Stockley

    Well, I'd probably recommend against the llamas, Summit. They spit. Alpacas are a little better natured, and WHEN they spit it's usually just spit. Rather than the green gooey rumen contents that will be launched by the llama. Probably TMI for most people, I suppose.

    I think bry actually put a finger on it. Are you more interested in monetary worth of the home or the more nebulous living quality? A custom designed, well built house will usually offer more of the latter. Depending, of course, on people of talent who are good at listening being integral to the process. Financially, the two often come out as a wash, unless the production home is particularly poorly designed or built.

  • taconichills

    Most people who build a tract home are unhappy with the final product and price.

    Most people that build a custom home with a vetted builder are happy in the end. Yes, the price is steep, but you know this going in and are at peace that the extra money has produced a more qaulity build.

  • bry911

    "Most people who build a tract home are unhappy with the final product and price.

    Most people that build a custom home with a vetted builder are happy in the end."

    Again, I would like to see a source for this. I strongly suspect that any satisfaction difference is largely a confirmation or selection bias.

    In the end, most people don't know what they don't know. If you look at quality of life I suspect custom homes lead to a better quality of life. But the question remains do the people who buy tract homes make the connection between their happiness and their home? I suspect they do not.

  • BT

    They just lying and making up facts. One builder Track home != another builder track home, and the custom homes are different as well, plenty of badly made custom homes.

    =

    Most ppl don't know exactly what they buying.. I just had to deal [and still working on] improperly attached deck ledger board with no flashing [or epdm] to the brick clad custom home. The damage is so massive you would not believe. One screw up and poof.

    =

    There are plenty of bad [or incompetent] architects and bad house designers or may be they do not have a time or willing to put efforts into a project.

    =

    On the subject of cheap building: Upgrading everything will make your house super expensive:

    Add 4000/p per lf foundation with full waterproofing foundation, paint on waterproof membrane on entire house, continues insulation + full air seal, Marvin Ultrex windows, full wood flooring with no carpet, sealed roof with metal, all floor trusses instead of 2x and I, high end trim in every room, structural garage floors, 1 story with high pitch roofs, various ceiling heights 10', 11', 12'; sound reducing walls, high end appliances, lighting; super upgraded HVAC 20SEER with communicating stats and zoning, wide PVC trim boards with copper flashing, upg gutters, french drains, 54" modern fire directvent place, active-radon mitigation, fire suppression sprinklers, r38 walls and R60 attic, custom garage/front doors - only few will be able to afford a house. Feel free to apply "Sarah Susanka" savings...

    =

    House building is a compromise between a budget and wants...

  • PRO
    Mark Bischak, Architect

    Home building is a target. The persons building the house (arrows) determines where that target should be in a world of influences and options. Some targets have an unlimited budget, on a lake, view of the mountains, prairie style, to accommodate extensive entertaining. Other targets may be a rectangle, small budget (very small), in a subdivision close to work, and space for grandpa. And all the other targets differ from those and each other.

    Track houses (misspelling on purpose) create targets in hopes to attract arrows. Their priority is some combination of profit and product. Many track houses I have seen (I include any house design conceived without a site or for a generic site) are poorly designed in itself or seem pretentious, not to mention the great potential of it being plopped on a site where it does not fit.

    A custom build gives maximum opportunity to have the home respond to your needs, the site, and the myriad of other factors that determine the target.

  • bry911

    They just lying and making up facts. One builder Track home != another builder track home, and the custom homes are different as well, plenty of badly made custom homes.

    T.R.A.C.T. It really isn't that hard!

    There are plenty of bad [or incompetent] architects and bad house designers or may be they do not have a time or willing to put efforts into a project.

    Your entire post is a fine example of an exception fallacy. Individual exceptions don't negate aggregate statements.

    For example, suppose I say, "automobiles are necessary in American society for transportation to work and food." Pointing out that Suzy lives next to the grocery store she works at, doesn't disprove my statement. For Suzy it may be true, but that doesn't make it true in whole.

    The existence of bad architects or bad custom builders doesn't establish their equality to tract builders. Is it possible that your specific plan will be worse? Yes. However, it is much more probable that it will be better.

  • BT

    > T.R.A.C.T. It really isn't that hard!

    Not according to autocorrect. Sorry, posted too quick.


    >Your entire post is a fine example of an exception fallacy.

    Really, All I suggested was most have a finite budget. Tract home may be a decent deal, may be not [cheaper labor and parts]. But ppl automatically that a custom homes are a better deal... I have seen loads of "custom" that not a good deal at all.

    =

    In fact the issue I am fixing right now, should not have existed in a custom home.



  • D E

    Hey Houzz Community,

    So before I ask my question I will tell you I am super green when it comes to home building. My wife and I are looking to purchase a new construction home in a community from a national builder (ie Highland Homes, Toll Brothers etc) the starting prices for the homes we are looking at are around $600k+for a 4/4 with 4200 Sq FT in TX. The floor plans are beautiful but the standard finishes are far from what I expected $600k can buy. The home comes with standard ceramic tile as flooring, not so impressive lighting etc..hopefully you get the picture. So my question is it is plausible to think that I can buy a lot and build a home around the same price and same size with better finishes...wood flooring, porcelain tile, lighting that I want etc..and I do understand builders make a lot of money on people choosing upgrades. Thanks in advance for any and all help and insight..

    there is also the owner builder, and that can save you 20+ percent which you can put into an even higher end home.

  • PRO
    Virgil Carter Fine Art

    "...I am super green when it comes to home building...."


    Owner-builder? Come on, DE...even you can see how this is completely a misfit in this case.

  • D E
    are you assuming the op doesn't have the intelligence to learn how to owner build his house?
  • jmm1837

    Back to the original question, we did neither. We knew the general area we wanted to live, close into the center of town, and looked at pretty much everything on the market on our price range, but couldn't find anything that really suited our needs. In the end, we went with a well regarded small local builder who was planning to do a teardown and redevelopment of an existing lot. He owned the lot and had plans drawn up for the new build by a local design firm. So, not a custom home, but not a tract or production home either. I might add that the quality of construction and finish is comparable to custom, even if the design isn't.

  • PRO
    Mark Bischak, Architect

    "...I am super green when it comes to home building...."

    I assume the OP is intelligent enough to not want to learn all the things he would learn while building his own house.

  • D E

    "...I am super green when it comes to home building...."

    I assume the OP is intelligent enough to not want to learn all the things he would learn while building his own house


    why do you assume he wouldn't want to be educated and empowered?

    "give the people light and they will find their way"

  • PRO
    Virgil Carter Fine Art

    How many houses have you built, DE?

  • PRO
    Mark Bischak, Architect

    "why do you assume he wouldn't want to be educated and empowered?"

    Because he never stated it, just like I assume your shift key doesn't work.

  • bry911

    why do you assume he wouldn't want to be educated and empowered?

    Personally, I would recommend an economics class in said education. Then point out that specialize and trade means that you create the most value by doing things that you are better at doing, and leaving the things that you are not particularly good at doing to others.

    Why stop at being your own contractor? You should also design your house, it really can't be that hard right, I mean architects do it all day long and they only need like five years of college and two years of apprenticeship. I mean if you want to be educated don't go half way, go for the works.

    Or you could spend that time going to your job, enjoying the fruits of the labor that you actually specialize in, and trade said fruits to other people who have others specializations. Which is how value is really created.

  • beckysharp Reinstate SW Unconditionally

    Some oft-repeated but very good advice in this particular forum, well worth repeating here, is you don't know what you don't know.

    And I say that as someone married to a builder for 25 years who spends her days talking to vendors, subs, and clients, and who ended up as the de facto GC when we built our own house the other year. It's a very steep learning curve, and may be more of a time investment than some are willing or able to make. Having a house built is often an incredibly stressful experience, even for those who are exceedingly familiar with the process. Adding the GC component for someone without any such experience should be considered very carefully and cautiously.

  • galore2112

    You are in TX? If it’s in a place like the DFW metroplex, tract vs. custom on your lot is comparing two totally different lifestyles and not just $$$.

    Tract homes can be very expensive too but then they are in fancy masterplanned gated communities with parks, pools (some very elaborate with water park style slides), gyms, mansion-style community centers with concierge etc.

    If you are into that lifestyle you can’t really get there with a build on your lot custom (unless you are mega rich).

  • PRO
    Mark Bischak, Architect

    I was in a gated community in Detroit the other day . . . every door and every window of every house had a gate on it.

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