The terms Custom Home Builder, Spec Home Builder, and Tract Home Builder can sometimes be used interchangeably. However, this is not always the case as each has different functions, which is why they build different types of residential structures.
Custom Home Builder
These build unique homes. The architectural style, size, and amenities will be tailored to the buyers’ needs and wishes. Generally, the homeowner or builder decides the variables that will make it different from the others. It usually takes a lot of planning and time and a lot of revising until the “perfect” design is achieved.
It can be small, medium or large in size. Maybe it has standard features or high-end luxury features. They are not always magnificent and elaborate palatial estates. While that is often the case, it is not always the case.
For example, a retired couple may want a custom home built that is only 1,500 square feet and has 2 bedrooms and 2 bathrooms. The floor plan can be U-shaped with the kitchen at one end, the living room in the middle, and 2 bedrooms at the other end. The garage will not be attached. Wood trim package will be stain grade Brazilian hardwood and hardwood floors will be the same. Therefore, both a large and a small property can be unique.
Special home builders
These are made to be sold. The builder speculates that he will make money from this transaction of buying a lot and building on it. It can be sold during construction, but the idea is for a builder to buy a plot of land and build a custom or semi-custom home on the lot and then sell it. Special houses are not always big and spacious. They could also be medium in size with average features.
The builder decides the floor plan rather than the buyer of the home, as it has not yet been sold. In a sense, it is a custom home, as it is not a standard mill house on a subdivision of land. However, it could be very simple or it could be a high-end decorated estate. Either way, it would be considered a special house.
These are commonly called “subdivisions.” Land houses are built by developers who own a large chunk of land that is divided into many smaller lots on which to build homes. Land is often stored until the economy is favorable to further subdivisions. The developer has chosen model homes from which clients can choose. For example, they may have offered 4 floor plans of various sizes and shapes and will place 25 of each model in the 100 lots in this subdivision.
Once the models are built, the builder begins selling them. They typically have an open house and several model homes for potential buyers to walk through, which are tastefully decorated to give them an idea of how nice their fully furnished new home might look. Usually the subdivision is built in phases and once the first phase is nearing completion and everything is sold out, the next phase will start according to demand. They are generally sold by real estate agents and real estate brokers. Model homes are generally staffed by a licensed real estate agent.