Real Estate Term of the Day: Custom Builder & Production Builder

Real Estate Term of the Day: Custom Builder & Production Builder

CUSTOM BUILDER – one who builds unique houses, in contract with a tract builder (Barron’s Dictionary of Real Estate Terms)

There are two types of custom home builders (source: REBAC Buyer Representation in New-Home Sales):

  1. Pure custom home builders – Works from unique architectural drawings to build a one-of-a-kind home to the specifications of a single buyer. Typically, the buyer acquires the land, hires an architect to prepare the drawings and specifications, and then hires a builder to execute the plans.
  2. Quasi custom home builders – Some builders maintain a selection of pre-existing plans. They sell a lot and allow the buyer to choose a plan for the home. The buyer may be able to modify the plan in various ways to suit individual requirements. The builder then carries out the modified plan.

PRODUCTION BUILDER – one who builds houses that all have a similar style and floor plan to those of all other houses in the development (Barron’s Dictionary of Real Estate Terms)

There are two types of production home builders (source: REBAC Buyer Representation in New-Home Sales):

  1. Tract homes – A tract home builder constructs subdivision homes from model plans. These display models are finished and ready to sell. Buyers of these homes have no options. The home is already built and in inventory.
  2. Modified tract homes – Within the same subdivision, a tract home builder may offer homes that have been partially constructed (50-75%) so that buyers can select options and custom amenities. A buyer purchases the lot with the partially built home and works out customizations with the builder. The builder then prepares new drawings and completes the construction.

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