The cost of new construction homes continues to rise in the United States, meaning that homeowners would be wise to cover their purchase with a warranty and inspection.
Generally, homeowners have two options for new construction homes: production and custom homes. Production homes feature a pre-designed home plan from the builder that offers little way in terms of customization.
Production homes are often called spec homes because they are designed to be move-in ready and give builders a quick profit. These homes often have a tried-and-true building design and a lower building carbon footprint.
On the other hand, custom homes are entirely unique and designed by the home builder and future homeowner. While spec homes are typically built in communities or tracts, custom homes can be built anywhere.
When deciding between a production or custom home, it’s important to understand how the construction process differs and when you should have an inspection conducted to protect your purchase.
Do Inspections Differ Between Custom and Production Homes?
Inspections will differ between custom and production homes, depending on what phase of the construction process you purchase a production home.
For example, if you purchase a move-in-ready spec home, you can hire an inspector to determine whether or not the finished product is liveable and up to standards.
By law, inspections are not required on newly built houses; they only need to comply with local building codes. Code inspections are not the same as private building inspections and don’t provide insight into a home’s condition.
Unfortunately, even new construction homes can have many issues, so we recommend getting a new home inspected before purchase regardless.
Furthermore, suppose you’re purchasing a production home still early in the construction process.
In that case, you could conduct an inspection to ensure that the fundamentals of the home are in good shape, such as the foundation, framing, and materials employed.
Conducting an inspection early in the process keeps builders honest, catches possible issues, and should be an integral part of any construction risk management plan for builders.
Custom home inspections don’t differ much in this respect, though additional inspections may be required during construction to ensure that homes comply with local codes. Building a custom home will probably require at least two separate custom home inspections to ensure the home is liveable during and after the construction process.
With that in mind, let’s discuss additional ways that protection differs between custom and production homes.
Are Warranties Different for Custom and Production Homes?
A new construction warranty or builder’s warranty covers most new construction homes, though this depends on the builder. For the most part, almost any production or spec home will come with a builder’s warranty to protect your purchase.
Builder’s warranties are generally structured as a 2-10 warranty:
- 1-Year Coverage: Materials and workmanship (individual materials and craftsmanship)
- 2-Years Coverage: Systems (electric, built-in appliances, plumbing)
- 10-Years Coverage: Structural components (foundation, floors, roof)
Custom homes may or may not come with a builder’s warranty, depending on the builder. Ask your builder before purchasing a home plan if your home will be covered under a builder’s warranty. Builder’s warranties are designed to protect you and the builder from future costs and repairs.
On the other hand, a builder’s warranty differs from a home warranty.
Home warranties often cover major appliances and some structural components depending on the warranty. Home warranties offer more options and a wider range of coverage options in this respect.
However, home warranties don’t generally differ between custom and production homes, though custom home warranties may cost more depending on your range of coverage.
Key Differences Between Custom and Production Homes
|Location||Community or Tract||Personal Land|
|Cost||Average home cost||Higher cost per square/feet|
|Number of Inspections||None required||One required|
|Covered by Builder’s Warranty||Yes (depends on the age of home)||Depends on builder|
|Covered by Home Warranty||Optional||Optional|
Shopping between custom homes and production homes generally comes down to cost and preference. For the most part, if you want to protect your purchase, you could hire an inspector for both sets of homes and get covered under a new construction warranty.
Nonetheless, warranties and inspections are not required by law in many states, so you’ll have to do your research ahead of time.
Beyond these considerations, homeowners should also account for several other factors when deciding between spec or custom homes, such as energy-efficient onstruction, structural integrity, and location.
Both production and custom homes are excellent options for finding a forever home and saving you money on repairs and maintenance. To better protect your home, be sure to search for homes with a builder’s warranty and purchase your own home warranty and inspection to ensure it is defect-free.