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Custom, Semi Custom, or Spec Home Builder?

March 11, 2020

New home owner


Maybe you’ve always dreamed of building a home just the way you want it, with the finishes and colors perfectly suited to your taste. Or maybe you’ve been hunting for your next home for months and there just aren’t any homes that really fit your needs. Or maybe you’re tired of all the headaches associated with older homes, from costly repairs associated with poor plumbing and outdated electrical wiring, or choppy floorplans that leave you separated from your family. Whatever the reason, you’ve decided you want to improve your living situation and build a new home. But now, the big question is, where to start?

Custom Home Builder, Semi-Custom Home Builder, or Spec Home Builder?

One of the first questions to answer is whether you want a custom builder, semi-custom builder, or what is commonly called a production builder of spec or inventory homes. Your decision about your builder will affect many subsequent steps in the home building process. Here are some basic explanations of each type of builder to get you started.

Custom Home Builders

A custom home builder is a builder that builds a home from a unique floor plan on a plot of land the buyer or builder finds.

This process sounds ideal but buyers need to be aware that it can be very lengthy and starts with finding a floorplan that works and then altering it with the help of an architect. Buyers may even create their own floor plan, again with the help of a professional. Buyers or builders will also need to find and purchase a plot of land and may have to deal with getting a piece of land subdivided. In addition to a loan for the land, they will need to get a construction loan, too. Most often, this means two closings and two sets of fees that go along with closings. estimates that construction loans for custom homes require excellent credit and a down payment of 20% to 25% because of the risky nature of the loans. A custom home can also have higher material costs as supplies are bought for only one home at a time and there are no quantity discounts (unlike production builders.)

Semi-Custom Home Builders

A semi-custom builder is a mix of a custom builder and production builder and may have a set of floor plans already designed, but is going to be more willing to make design and structural changes.

With structural changes, a buyer can expect the construction process to take more time as those changes will have to be approved by an architect or engineer. Offering custom choices in finishes can also affect the price of a home as those quantity discounts received by production builders are no longer available. Some production builders may morph into semi-custom if they offer a large number of options or finishes, such as a screened-in porch or added third floor or garage bay, for example.

Spec Home Builders

A spec home builder, also known as a production or inventory home builder, is a builder that has a predetermined set of floor plans and oftentimes builds or starts a home before having a buyer for that home.

The result: convenient options for someone who wants a new home but can’t wait a year or more for a custom home to be built. An inventory home (often called a spec home) built by a production builder can be built in half that time. Much of the behind-the-scenes work has already been done by a production builder. For example, the infrastructure (like power lines, water lines, and roads) to the community and home site itself is already complete saving a lot of time. At Eastwood, we can build a home in as few as five months. When you consider that an inventory home may already be in construction or even finished by the time a buyer arrives on-site and contracts on that home, that buyer could close on a newly built home in as short as a month’s time. There are also cost savings that are achieved by production builders as they are able to buy larger quantities of supplies because they are building more homes with the same products. Financing for a spec home is easier, too. For example, at Eastwood Homes, we have narrowed down the field of lenders to just a few who are our preferred lenders. We hold them to a higher standard in terms of customer service and closing on time. They know exactly what it takes to get a new construction home financed and know what we need from lenders, as well. There are oftentimes incentives available to buyers who use our preferred lenders. We don’t require that buyers use those lenders, but if you are already a homeowner, you know the closing process is already rife with potential delays, and using an outside lender can just lead to more headaches for a buyer.

At Eastwood Homes, we fall somewhere in the middle of the spectrum. We have many homes that are currently under construction, giving their future owners the convenience of being able to close quickly on that home. For buyers who are looking for a more custom feel, we have a wide array of floor plans and options that are available to help personalize the home to a buyer’s needs. Most of our divisions even offer an expansive design center for buyers to choose their preferred finishes, giving our homes a custom feel at a production price. 

Interested in learning more about Eastwood Homes? We build homes and subdivision communities in the Charlotte, Raleigh, and Greensboro areas of North Carolina, Columbia, Charleston, and Greenville areas of South Carolina, Atlanta, GA, and Richmond, VA.


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Eastwood Homes, Buying a New Home, Energy Efficient Homes, New Homes

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