The terms Custom Home Builder, Spec Home Builder, and Tract Home Builder can sometimes be used interchangeably. However, this is not always the case, since each one has different functions, which is why different types of residential structures are built.
custom home builder
These build unique houses. The architectural style, size and amenities will be tailored to the needs and desires of the buyers. Generally, the home owner or the builder of the home decides the variables that will make it different from the others. It usually takes a lot of planning and time and many revisions 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.
For example, a retired couple may want a custom built home that is only 1500 square feet and has 2 bedrooms and 2 baths. The floor plan could be a U-shape 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. The wood trim package will be stain grade Brazilian hardwood and the hardwood floors will be the same. Therefore, a large property or a small property can be unique.
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 parcel of land and build a custom or semi-custom home on the lot and then sell it. Spec houses are not always big and spacious. They could also be medium in size with average features.
The builder decides the floor plan instead of the buyer of the house, since it is not yet sold. In a sense, it is a custom home in that 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 finca. Either way, it would be considered as a spec home.
Home builders on stretches
These are usually called “subdivisions.” Lot houses are built by developers who own a large piece of land that is divided into many smaller lots on which to build homes. Land is often stored until the economy is favorable for new 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 put 25 of each model on the 100 lots in this subdivision.
Once the models are built, the builder starts selling them. They typically have an open house and several model homes for prospective buyers to walk through, all of which are tastefully decorated to give buyers an idea of how great their new home would look furnished. Typically, the subdivision is built in phases and once the first phase is nearing completion and everything is sold out, a next phase will begin based on demand. They are generally sold by real estate agents and real estate brokers. Model homes usually have a licensed real estate agent.