The Key Differences Between Tract, Spec and Custom Homebuilders

When it comes time to house hunt, there are three primary categories of residential homebuilders to choose from: tract, spec and custom builders. There are many aspects that set each apart, but here are the basics potential homebuyers should consider to ensure they're investing in the type of home that best fits their preferences, budget and stage of life.

Tract homebuilders buy large tracts of land and build subdivisions that generally offer a choice of three floorplans. While the buyer has little say over the home design other than the basic floor plan, tract homes are often less expensive (per square foot) than spec or custom builds and have a set, quick(er) timeline. 

Another advantage to tract builders is that they are constructing dozens – or even hundreds – of houses, so they frequently look for proven, durable building materials that speed construction while improving the homes’ energy efficiency. For example, KB Home, one of the nation’s largest tract builders, frequently uses LP^® TechShield^® Radiant Barrier because it installs just like regular roof sheathing and can dramatically reduce the amount of radiant heat emitting into the attic.

So, if you're looking for complete control over your new castle, you'll need to find a custom builder. If you're priorities lie in typically lower costs and quicker construction, a tract homebuilder is a great fit for you.

Spec homebuilders derive their name from the fact that their projects are speculative in nature, meaning they buy land without a buyer speculating that they can later sell the home they build on it. They often purchase a small parcel of land, build one or two homes on it and then put the properties up for sale. 

One advantage of working with a spec builder is that they are often more flexible on pricing if the home has been on the market for a while. Another benefit is that while some of their homes may have the same general layout, spec builders have more flexibility in style, so they offer some of the unique design benefits of custom homebuilders without the heavy price tag.

For example, Jonathan Tate, owner of OJT in New Orleans, is a spec homebuilder who gets creative with small parcels of land. “New Orleans has a lot of remnant lots because of the winding Mississippi River,” says Tate. He recently completed a spec home that’s only 10½ feet wide, yet features one bedroom, 1½ baths and office space – an ideal, distinctive starter home for a buyer looking for a detached house in New Orleans’ Irish Channel neighborhood.

Custom homebuilders turn the specific wishes of an individual buyer into a “dream home”. The buyer has complete control over the floor plan and all other details. If you want solar panels on the roof or engineered wood siding on the exterior, the custom builder makes it happen. 

Mike Schwartz Construction in Tacoma, Washington, for instance, selected LP^® SmartSide^® Trim & Siding for his own 3,500 square foot custom home. Schwartz made the choice based off his first-hand experience with LP^® SmartSide^® siding products. “I like them because they have a 50-year warranty, as well as stand up against rain and moisture.”

As with any product, customization comes with increased cost, so custom homes are not as frequent of an option for first-time homebuyers. Because each house is unique, most custom builders also limit their workload to ten or fewer homes per year (so are in higher demand) and may have slower construction timelines to get each detail just right.

On the contrary, being able to choose custom building materials can sometimes lead to the ability to speed up installation, as was the case for Zicka Homes in Cincinnati, Ohio. The company recently used LP Legacy^® Premium Sub-Flooring on a custom build for an unusual reason: the home was being built for Ted Fitz, an executive of the Gorilla Glue Company. LP Legacy is made with Gorrila Glue technology.  "Seeing the benefits that a good sub-floor can have for our builder, such as water resistance and easier hardwood installation, were attractive to us because we are on a tight timeline to finish our home and delays due to sub-floor would not be good" says Fitz.  

With different types of homebuilders offering varying benefits, no matter what stage of life you’re in, there is a builder out there for you.