Home Builders and Developers

If you’re clicking this post, you’re likely more interested in the home builder part than the developers. The difference between the two is easy to understand – builders build, and a developer develops. The developer engages in the work before the build. This can include obtaining the permits, purchasing the raw land (or financing it), getting sewage, electric and water lines installed, creating an actual lot to build on as well as defining where streets and curbs end and the property begins.

And this is just the tip of the iceberg. Between all these steps is enough paperwork to drive even the most prolific writer nuts. Developers have complicated jobs, but also get paid handsomely. So it works out in the end. The developer’s work goes on past the building part, but once this first part is complete, the builder comes into play. Builders can work for developers, be part of the same firm, or of course, be entities on to themselves.

Within the building segment, there are custom builders, production builders, and volume builders. Custom builders are those that build one-of-a-kind homes and are easily the most expensive of the three. Production builders are those building a set amount of homes in a given location, while volume builders build thousands of homes over multiple markets using a similar design to streamline the production process.

So now that you understand the difference let’s look at how to choose a home builder. Deciding to build your own home is a big step. This piece of construction will likely remain with you for some time, so wisely choosing the builder is key. The first thing to do is determine your budget. This isn’t easy. There are a ton of miscellaneous costs that come up in every building process. The recommended thing to do is sit down with the builder and map out a budget. You will then want to add an essential contingency line item (calculated as a percentage of the total).

Second, once your budget is determined, you can now work in that price range to see what style home you want (based on what you can afford). A lot of people skip to this step before the budget. The problem with that is you get your hopes up for something you might not be able to build. There’s nothing worse than dashed dreams before you get going.

The style of home can be anything from a traditional colonial design to a more contemporary, modern feel. Some builders specialize in one over the other, so asking those questions up-front before committing is a good idea. Third, most cities or counties have a local home builders association. This is a list of builders in your area who have been vetted and should have reviews online, etc. Social media is an excellent method to keep the frauds and phonies at bay. Use this list to create a more refined list based on feedback and begin scheduling appointments.

Once you have an appointment, arrive with questions. For example, how long they’ve been in business, if they’re licensed and insured (more than likely), any personal references they can provide, and a site visit of a home they’ve built. From there, you’ll get quotes from each, and after you’ve refined your budget with the top three, the choice is yours.

Best of luck, it’s an exciting process, and while it might seem stressful at times, the final product is more than worth it.