Buyers looking at newly built homes typically choose a community and a price range, followed by a particular lot and a model.
If you’re fortunate enough to live in an area with an abundance of choices for newly built homes, you may be wondering whether it’s advantageous to opt for a home built by a larger national builder, a medium-sized builder who works in your region or a smaller local or custom builder. Realtors who work with buyers and builders of every size say that while there are differences in their clients’ experiences depending on the builder, there are advantages offered by every type of company.
“I call them Papa Bear, Mama Bear and Baby Bear — for the big national builders, the regional builders and the local builders,” says Elizabeth Lucchesi, a Realtor with McEnearney Associates in Alexandria, Va. “Each one of these builders has a big incentive to provide excellent customer service.”
Representatives of the large builders often have their bonuses weighted according to customer satisfaction surveys, so they do their best to make sure every part of the customer experience is as good as possible, says Lucchesi. Regional and local builders are aware that a great reputation is crucial to their continued success, so they, too, handle everything with integrity.
“It’s important to set buyers’ expectations for the experience of building a new home and how much communication they’ll receive,” says Jennifer Lewis, a Realtor with Papasan Properties Group with Keller Williams Realty in Austin, Texas. “Both big and smaller builders can do a good job at that. The bigger builders have systems in place and a process they follow with every home and the regional and local builders are good at personalized communication.”
Large national builders are structured to provide excellent performance and smaller builders have the incentive of having even more to lose if one customer isn’t satisfied, says Andrea Pietrinferno, an associate broker with Long & Foster Real Estate in Cherry Hill, N.J.
Here are some topics to consider if you’re weighing the advantages of working with a smaller or larger builder:
Locations and Lots
“Most buyers are concerned about resale value and a lot of that depends on location,” says Pietrinferno. “Bigger builders have the capital on hand to buy more lots and in the best locations. Local builders have to work hard to get great locations and to finance them, but they also can design specific homes that work well for that location and that market that they know so well.”
“The number of choices available for personalization are more a function of the price point than the size of the builder,” says Lewis.
Some national builders offer semi-custom homes with a multitude of choices, while others stick to an “A,” “B” or “C” option for buyers to choose between. Regional and local builders are similarly diverse in their level of options.
Larger builders are more likely to have a design center where you can make your selections, but smaller builders can usually allow you to see your options on display in a model home or recently completed homes.
Regional builders often have a good sense of local design trends and will display them in their models, says Lewis.
“National builders are designed for performance with a team of people to bring the best product they can bring to buyers,” says Pietrinferno. “These companies have a massive amount of information at their fingertips about cutting-edge products and techniques and trends.”
Change orders can be problematic once construction has begun, but if you think you’re likely to want to make a lot of adjustments to your choices during the building phase, a smaller builder might have an easier time accommodating you, says Lucchesi.
“A bigger builder may be a little stricter about when they’ll stop making changes to your home,” says Pietrinferno.
Smaller builders have an intense interest in personalized customer service, says Lucchesi, while about 75 percent of the larger national and regional builders have a service person on site to take care of their customers.
“The personal attention you get is as good as the person who gives it to you,” says Pietrinferno. “The experience will be different with a national builder who has a person whose job is to take care of the final punch list compared to a small builder who does his own punch list, but either way, you’re likely to get taken care of.”
“Prices depend most of all on your location and client desires rather than on the size of the builder,” says Lucchesi. “Bigger builders have an advantage in that they can buy in bulk and sometimes they have the ability to offer an incentive, such as a free finished recreation room, depending on the phase of development. But in the end, regional and local builders need to stay competitive, and pricing is part of that.”
After all, Pietrinferno says, “every builder, no matter how large or how small, ultimately has the customer’s best interests at heart because they want their customers to be happy and to give them good referrals.”
Michele Lerner is an award-winning freelance writer, editor and author who has been writing about real estate, personal finance and business topics for more than two decades.