Thinking of building a new construction home? There are many ways you could go about it. You could buy your own piece of land and build a custom home from scratch. Or a very popular approach is to build a new construction home in a master-planned community from a production home builder. But you may have noticed that there is a discrepancy between the advertised prices and the actual prices of homes for sale in these communities. So in this post, we’re going to explain how it all works so you fully understand it.
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New Construction Home: Custom Build vs. Production Home Building
For many people, it’s a dream to be able to build a brand new home for you and your family. Maybe it’s something you’ve been dreaming about for years! Or perhaps you just love the idea of moving into something that’s never been lived in before with the most up-to-date technology and trends.
The first thing to think about when building a new construction home is that there are two main routes you can take: custom build or production home building. Each method has its advantages and disadvantages, and it’s important to weigh your preferences, budget, and timeline before deciding which route is best for you.
Custom Build Homes
When many people think of building a “dream home” they might think about a custom-built home. This is where you to create a unique space tailored to your specific tastes, needs, and lifestyle. You can work directly with an architect to design the floor plan, choose the materials, and select the custom finishes that suit your style. Or you may even be able to buy pre-designed floor plans and provide them to a builder.
Another option is to find a custom builder in your area and see if they have existing floor plans that you can use and even modify. However, having this level of flexibility and customization comes at a higher cost, and the building process will usually take longer.
- Advantages of a Custom Build Home:
- Personalized design
- Higher quality materials
- Greater control over the final product
- Disadvantages of a Custom Build Home
- More expensive
- Longer construction timeline
- Could bring more stress and higher involvement
Production Home Building
An alternative to building a custom home is to go with production home building. Production building involves selecting a pre-designed floor plan from a production home builder, usually in a planned community that is being developed by the builder. They usually offer a variety of different home plans to choose from as well as finishes and designs.
Because these homes are typically constructed in large-scale developments and production home builders specialize in this type of new home construction. This method comes with a more streamlined building process. By working with a fixed set of floor plans, design options, and a standardized process, production home building can be more cost-effective and time-efficient.
So when you are driving around and seeing communities full of new construction homes, typically these are production homes by a production builder. A great example of this is the popular Wellen Park Development here in southwest Florida which consists of 10+ different new construction communities.
- Advantages of Production Home Building:
- Lower cost
- Faster construction
- Standardized quality
- Disadvantages of Production Home Building:
- Limited customization
- Less control over the final product
Which New Home Building Method is Best for You?
When deciding between a custom build or production home, consider factors like your budget, the level of personalization you desire, and the building timeline that works best for your schedule. If having a personalized space with high-quality materials is essential to you, a custom build might be your best choice.
However, there are many who don’t necessarily want to go through the process, stress, and cost of building a fully custom home. Instead, they prefer to build a home in a new construction builder community that makes it easy. In fact, most of the people we work with are looking for a more affordable option with quicker construction times so they can get right into living their Florida dream life!
That’s why production builders are super popular, especially here in Florida.
What Are Production Home Builders
Production home builders are companies that specialize in constructing new homes, typically within planned builder communities. These builders offer various floorplans and design options to cater to the needs and preferences of their buyers. They specialize in this so they’ve got a system down and understand what homebuyers are looking for. From the floor plans they offer to the amenities they provide in their communities.
In a production home community, you’ll likely find builders who are very experienced and have a team on hand to support you throughout the process. When you choose a production builder for your new construction home, you can expect a streamlined process. The builder will guide you through the design and construction stages, providing you with a timeline and ensuring your home is built on schedule.
Benefits of Builder Communities and Production Homes
Builder communities are designed with your needs in mind. They often feature fantastic amenities like parks, playgrounds, fitness centers, and community clubhouses and some even have activity directors who help foster a sense of camaraderie among residents. These well-planned neighborhoods aim to provide you with a comfortable, enjoyable living environment.
For example, some communities might be geared toward families and offer larger 2-story home plans with lots of amenities for kids and families. Another popular type of community here in Florida are resort-style communities where residents can live like they are on vacation at a resort every day! Others, especially here in the Venice Florida area, might target retirees and seasonal “snowbird” residents with homes such as villas.
As a potential homeowner, you can choose from these different communities based on what they offer and how they fit your dream lifestyle.
Another major benefit of production builders is that they will have a streamlined construction process which allows for more efficient and cost-effective construction. They typically have pre-selected floor plans, features, and finishes so you can have a good idea of what your home will look like even before it’s built. This can save you valuable time and energy!
When it comes to customization, production homes allow some flexibility in personalizing your space. While there might be limits, you can still choose from a range of styles, finishes, and materials to make your home unique and ensure it reflects your taste. Energy efficiency is often a priority in builder communities and production homes. Builders usually incorporate energy-saving features like insulated windows, LED lighting, and high-efficiency appliances. As a result, you’ll benefit from lower utility bills and a smaller environmental footprint.
Lastly, new construction homes by production builders often come with warranties and guarantees that give you peace of mind. This means that if issues arise after you move in, you may have a recourse to get them fixed promptly, without incurring additional costs.
Keep in mind that, while production builders offer a range of options, there may be some limitations when it comes to customization.
Some key points to consider when working with production home builders include:
- Efficiency: Production builders are experienced in constructing multiple homes simultaneously, resulting in a more efficient building process.
- Cost: Production homes are generally more affordable than custom homes, as builders can buy materials in bulk and pass those savings on to you.
- Quality: Many production builders work with professional architects and designers to offer well-designed, functional floorplans and a selection of finishes and materials.
Overall, production home builders can be a great choice if you’re looking for a new construction home within a planned community and at an affordable price with modern style and convenience.
READ MORE: Buying a House in Florida – What To Know (Especially if You Don’t Live Here!)
What to Know When Building a House with a Production Builder
When building a new construction home with a production builder, you can expect a few key things.
Floor Plans With Structural Customization Options & Design
One of the first things you’ll likely do is review the different floor plans available with the builder and within their community and the options available. This allows you to customize your home to fit your needs, but within the limits set by the builder.
Structural options could be things like tray ceilings in the living and bedroom areas. Or perhaps you they allow you to turn a “flex room” into a bedroom by adding a closet. You might want to swap out a tub in the guest bathroom for a shower and you may even want to extend your lanai.
Many production builders will have floor plans that include a whole list of structural options. Basically, they are a way to enable buyers to customize their home in a way that suits them but within limits so that the builder can continue to maintain their production efficiency.
Another way you can customize your home is with the actual design elements inside. Buyers can choose from a range of options when it comes to interior finishes and design options such as flooring, cabinets, tile, fixtures, paint colors, etc. But be mindful that any upgrades or changes from the base design may come with additional costs (which is what we will discuss in detail below, so keep reading!).
How Long Does It Take to Build a House With a Production Builder?
In terms of timeframe, a new construction home with a production builder is going to be much faster than a custom home! However, the total build time will range depending on the community and the builder itself. Every builder is a little different in how they do things and the process for selling / building out their communities. It also depends on things outside their control like the weather, labor shortages, supply chain issues or other unforeseen circumstances.
For the most part here in the southwest Florida area and here in Venice, many of the production builders here have build times ranging from 4-12 months on average. Some could be further out if they allow for more customization options and others could be even quicker – especially if they are offering “quick move-in” homes which might even be nearly completed before they sell them! We’ll talk about these “quick move-in” homes later in the pricing section below.
The Building Process & Check-Ins
Once the building process begins, you will have opportunities to tour your home throughout different stages of construction. You should have a rep working with you at the community who will provide you with photos and updates. This is also where our team of realtors, like Josh, are key in helping you to stay in the loop on the progress and ensure that any issues are addressed. Communication key so don’t hesitate to ask questions or share your thoughts.
To ensure quality in your new construction home, reputable production builders will perform inspections and tests. Additionally, most production builders provide a warranty for their work, which can give you peace of mind in case issues develop after you move in.
Why is the Advertised Base Price of a New Construction Home Different Than the Actual Price?
One of the biggest questions we get from those interested in new construction homes is why the prices they see advertised are not the actual price when they inquire about a new home. For example, we get calls from buyers asking about a $300,000 villa they saw advertised on a sign outside a community in Wellen Park. But when we dig into what’s available, the final prices are closer to $360,000.
We understand that this can be incredibly frustrating and confusing! So we want to help make this more clear and easy to understand why there is a discrepancy.
First, remember that the advertised price is simply a starting point for builders to showcase their homes at an attractive price. It usually includes just the base prices of their most affordable home.
Think about it. A house with ceramic tile flooring throughout, granite countertops and top-of-the-line finishes will actually cost a lot more than a home with carpet and basic tile and countertops. How about a home on a large cul-de-sac lot that overlooks water versus a small lot with no view?
There are MANY different elements that will affect the final cost of a home. Because of this, the builders will often advertise just the lowest base price. That keeps it easy for them to give a starting point and a frame of reference to compare different communities. It also allows them to get more prospective buyers in the door to inquire.
How Does New Construction Production Home Builder Pricing Work?
Okay, so now that you understand how building a new house with a production builder works, let’s discuss pricing!!! This is a big one because it is honestly one of the MOST ASKED QUESTIONS when we are working with buyers. That’s because it can be slightly confusing at first, and sometimes the pricing you might see online or advertised from these production builders may not be the final price.
So let’s get into it!
1. What Does the Base Price of a New Construction Home Mean?
The base price of a new construction home refers to the cost of the basic structure and does not include additional features or upgrades. This price typically covers only the essentials, such as the walls, roof, plumbing, and electrical systems. So the base price is the cost of the home with only the standard options that are included and NO upgrades or changes.
It is important to understand that all production builders are different in what they include in their standard base model price. So while one builder might include hurricane impact windows as standard, other builders might charge that as an upgrade.
The most confusing part is that when you walk into their models they will have them all decked out! And many of the things you see and like in the model may actually be an upgrade and not included in their standard base price. So be sure to ask!
2. What is a Lot Premium in New Construction?
Ah yes, this is another important consideration. When you look at a new home community there will be many different homesites available on the community plan. But as you can imagine, there are going to be homesites that are more desirable than others. For instance, a larger lot with a scenic view, water views, closer proximity to amenities, or situated at the end of a cul-de-sac with a larger lot shape may be more popular! Naturally, those lots are going to cost more.
That’s why many of these production builder communities have what is called a lot premium. A lot premium is the additional cost you may incur for new construction homes built on more desirable pieces of land within the community. This premium takes into account factors such as size, location, views, and accessibility.
Lot premiums are an additional price that you may have to pay on top of your base home price. Every community is different, and it is possible that these lot prices can change or even be negotiable. But it really depends on demand.
3. What Does Structural Upgrades Mean in Production Home Building?
Structural upgrades are enhancements or modifications to the basic structure of a new construction home. Even though buying a house with a production builder is different than a totally custom home, there are still some limited customizations you can make.
Remember in the previous sections we talked about structural upgrades such as tray ceilings, extending a lanai, etc.? These are ways that production builders allow you to customize a base floor plan. It’s great to be able to make these structural changes, but they are considered “upgrades” to the base model and that means that they will come at an additional cost.
This is one of the areas that can get confusing because buyers will walk into a model and think that everything they see is included. When in fact, a lot of what they see might actually be considered an upgrade!
Because of this, we recommend asking for a list of what is included in the base price of the model and what their upgrade options are — and the associated prices! This way you can calculate how much it would actually cost to customize the home the way you want and avoid being surprised later!
4. Production Builder Home Interior Finishes & Design Process
The last part of designing your home is actually picking out the interior finishes! This includes things like your flooring, tile, styles of cabinets, paint colors, fixtures, etc. This can be really fun if you are interested in interior design. But it can also feel a bit overwhelming too!
Many of these builders will have a “design center” where you will go to pick out everything you want inside your home. Every builder has different options, and this depends on their relationships and contracts with suppliers. Some builders will have only a few options or even put together “packages” that you can choose from to make it quicker and easier. Others will let you literally pick out every little thing!
The important thing to keep in mind is that production builders will have standard options and then upgrades for design as well. For example, perhaps you are working with a builder that includes level 2 cabinets. But you decide to upgrade to level 3. That would be an additional cost. The same goes for things like changing carpet to tile in the bedrooms or extending your shower tiles all the way to the ceiling.
So when all is said and done, your final choices for the design and finishes will have an additional cost that will be added to the base price, lot, and structural upgrades.
Traditional Pricing New Construction Homes vs. All-in “Bundled” Pricing
Traditional pricing for new construction homes includes all the pricing layers that we mentioned and adds them together for the cost of the home.
BASE PRICE + LOT PREMIUM + STRUCTURAL UPGRADES + DESIGN UPGRADES = FINAL HOME PRICE
This approach is much more detailed and allows the buyer to control the final price more. For example, you may opt for the cheapest lot and then put the highest level of finishes inside. Or you may choose the best lot in the community and go with just the basics inside the home. The choice is really up to the buyer where they want to spend more money or save money.
The downside to this approach is that it can be more confusing to understand all the factors involved in the price. In addition, it makes it more challenging to budget and know what your final price is going to be! Lot prices can vary and even though you can get a list of structural upgrade costs, there are so many design choices that it’s hard to know what you might spend for tile, paint, fixtures, etc.
One way to help get a better understanding is to ask the builder for an average of what other buyers tend to spend on things like structural upgrades and design. But still, it’s just an estimate and might not represent your tastes.
All-in-pricing and Bundled Pricing for New Construction Homes is Becoming Popular!
All-in-pricing and bundled pricing are approaches that make it easier for you to budget for your new construction home. With all-in-pricing, the builder offers a comprehensive package that includes the home, lot, and any chosen upgrades. They may also bundle together popular upgrades and design options together with a package price.
The biggest advantage of this type of pricing is that it makes it easy to see exactly what you are going to spend on a new home. It also takes the stress out of all of the choices mentioned above when it comes to upgrades and design. Oftentimes times the builders and their designers will create packages that are the most popular options people choose anyway!
However, the downside of this is that you have to pick from the package options and you cannot make substitutes or changes. If you do want to change out something, like for example tile in the bathroom, you would have to do that after closing at your own expense.
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How and When Do I Pay for My New Construction Home?
When it comes to buying a new construction production home, it’s essential to understand the payment process. This will help you plan your finances and ensure a smooth transaction. Keep in mind that every builder and community could be different. But generally speaking, here is how & when most new construction communities collect payment:
Reservation Deposit: After selecting your desired production home, you’ll usually be asked to place a reservation deposit. This initial payment, which often ranges from 1-5% of the total home price, secures your chosen property while you complete the necessary paperwork and acquire financing.
Additional Payments? Every builder and community is different when it comes to any additional payments. Some builders may require additional deposits at various stages during the process, such as after structural design and interior design and finishes are selected. Other builders won’t require anything else until closing. So it can really depend. Be sure to inquire specifically about this beforehand so that you know exactly what to expect.
Final Balance Due at Closing: When the home is completed and you “close” on the home transaction the remaining balance is paid (whether it is cash or via a mortgage) and you are ready to enjoy your new home!
Where Are Some of the Best Places to Build a Home and Live in Florida?
If you are thinking of buying a new construction home, then you might also be wondering about some of the most popular areas to live in the State. Be sure to check out our blog post about the best places to live in Florida (our picks!) as well as some of the cheapest places to live in Florida that are NOT in the middle of nowhere!
We hope these will help you discover different areas and narrow in on somewhere that you might want to build your next home to live that Florida life you’ve been dreaming about.
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