#518 - BUILDING A CUSTOM HOUSE AS SPEC HOUSE
SUMMARY
This week, David and Marina of FAME Architecture & Design discuss building custom homes as spec homes. The two cover the types of houses, the differences between custom homes and spec homes, designing for resale value, planning for change, balancing good design with being cost-effective, timelines for spec and custom homes, client influences, why custom homes might not work out, build quality, profit, and more. Enjoy!
TIMESTAMPS
(00:00) Spec House vs Custom House.
(02:47) Why merge custom and spec homes?.
“There's a huge burden on homeowners to always be thinking about potential, perhaps more than they should. I think it can become too heavy on their shoulders and affect how they approach what their house should be. If you're only going to live in a house for two years and you know you're going to sell it, then yes, you should think about the market. In that case, you probably should design for the market rather than design for yourself. But if you're going to live in a house for 10, 15, or 20 years, then I feel like the burden of the market shouldn't impact the way you're approaching the design. Who knows what the market is going to be like in 20 years?” (04:20)
(08:28) Design for resale value.
“People often underestimate the importance of whether or not the home is special. If a potential buyer visits your house and three other houses for sale down the street, will they remember yours? Was there a unique architectural moment in the house that causes everyone to say, “Wow, this is incredible”? Those moments are not necessarily features listed in a database. They are more like emotional responses that people have when they experience a house. That should be in a custom home, but it should also be in a spec home, because that's what's going to make the house stand apart from the other ones listed in the neighborhood.” (11:43)
(15:53) Planning for change.
(23:15) Cost-effective & good design.
“There's a misconception that spec is cheap and custom is expensive. You could have a custom-designed bathroom that's using cheap materials, and it still works great and looks great. It's about efficiency, and I think that's how spec homes should be thought about. They're homes that are trying to be efficient in their spending and in the energy that's being put into thinking about them. Efficiency in a spec house also means being efficient in the design process. That's the biggest difference between a spec home and a custom home. It's that design process: how quickly can decisions be made and who's making them. Oftentimes, the design process for spec homes is much more cost-effective because there is no client.” (25:45)
(27:09) Timeline for spec house vs custom house.
“Spending more on the soft costs, such as the design and engineering professionals, will lower the hard costs (ie construction costs) by allowing construction to go a lot faster because you had enough time to think about what needs to happen before starting construction. When you're trying to take shortcuts at the beginning during the planning phases, you end up trying to solve the problems as you're building the home, and that never works out. It just never works out.” (34:24)
(35:09) Client influence on project timeline.
(48:42) Why custom homes might not work out.
“As a general rule of thumb, if you're doing a true, proper custom house, don't assume you're going to make money on it unless you run a pro forma and it does, in fact, pencil out. If the numbers work, then great, but it's unlikely. A custom house might cost $750 to $800 per square foot, whereas if that same home were to be built as a spec house, you’d probably have to build it for more like $500 to $550. That's a $250/sf difference, which is huge across the total project. Historically, that cost savings doesn't happen when you have an owner at the wheel dictating the quality of the final outcome. The difference quickly disappears, the cost goes back up to a custom house price, and the profit isn't there.” (54:03)
(57:00) More care for quality of homes over profit.
“I do wish that, in general, more people would think about their home as their forever home, their family home, the home that would pass on to their kids or grandkids. I think that's also why there are so many bad houses, because we're just playing Monopoly with houses. We're playing Sims. It's like, “Put three windows in for resale, then lock a Sims person in the pool, and leave. On to the next round or next level.” There's no personal commitment to owning a house or property. It's just like swapping cards. I do wish that the cultural mentality would change a little bit, so people would actually care enough about the decisions they're making that they would keep those homes forever, or as long as they can.” (57:00)
