Posted by Melissa Lynn Galland on May 19, 2017 8:55:51 AM
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Realtors work with all sorts of clients, including those who want to buy an existing home, people looking for land as a long-term investment, and customers who want to purchase land and build on it right away. In some cases, clients are looking for the home of their dreams, but it doesn’t exist in the region they are searching. Customers with unique needs like multigenerational floor plans or single-floor living might struggle to find a home that matches their requirements without investing in a major renovation. Whatever the reasons might be, custom homebuilding could be the answer.

For new realtors who are not yet familiar with custom homebuilding, it makes sense to do some research to fully understand the benefits and potential challenges before offering this solution to clients.

Understanding the Costs

The cost of building a custom home includes three major components: land, site development, and the labor and materials to build the home. The costs related to purchasing an existing home are often more straightforward, unless the homeowner wants to renovate. In that case, the cost of the home plus renovation can often exceed the cost of building a new custom home. The annual Cost vs. Value Report from Remodeling magazine indicates the national average for some common mid range remodeling projects, including:

  • Bathroom addition – $42,232
  • Major kitchen remodel – $62,158
  • Family room addition – $89,566
  • Siding replacement – $14,518

These renovation costs can add up quickly and still might not result in a home that is the perfect fit for the client. Get a clear understanding of the client’s budget for the entire project and his or her design goals in order to make the best recommendations for his or her specific situation.

Understanding the Timeline

Building a custom home might not be as simple as purchasing an existing home and moving in right away, because the design and building process naturally takes time. However, finding the perfect home often doesn’t happen overnight. In fact, finding a suitable home for sale in the neighborhood your client prefers could ultimately take longer than the custom homebuilding process. You also can’t predict the sales price or guarantee that the seller will select your client’s offer. So, although custom homebuilding might take longer (plan on roughly nine months to a year), the end result will be a predictable timeline and a home that meets your client’s budget goals and design dreams.

Understanding Lot Requirements

Not every lot is suitable for building a new home. Get an understanding of your local zoning and permitting requirements to determine if particular lots will be appropriate. You must also take into consideration factors such as water sourcing, utilities, septic and sewer systems, and the size of the lot. Narrow lots will present certain limitations that you should make your clients aware of before they buy so that they know what to expect during the design process.

Understanding the Client Commitment

Purchasing an existing home requires a significant time investment, reams of paperwork, and many other details. However, building a custom home demands even more attention to detail, many more moving parts, and patience. Not every client is prepared for this level of commitment or has the time to invest in making it happen. Gauging the customer’s interest level and ability to execute certain tasks is an important step in deciding what type of custom home to recommend. For clients with a big dream and a tight budget, a process that allows them to build equity might be the best solution. On the other hand, customers who don’t have the time to spend on tasks like site development and painting would benefit from a turn-key solution.    

Adair Homes is happy to work with new realtors who want to offer custom homebuilding as an option to their clients. Our realtor referral program helps new realtors increase listing leads and boost revenue through land sales and a commission on the home base contract amount. If you’re interested in learning more, get in touch with us today.


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Realtor Referral Program