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Ask Adam: Custom or Spec Home?

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This regularly-scheduled sponsored Q&A column is written by Adam Gallegos of Arlington-based real estate firm Arbour Realty, voted one of Arlington Magazine’s Best Realtors of 2013 & 2014. Please submit follow-up questions in the via email.

Our family is growing and we are in serious need of a larger home and don’t feel the one we are currently in is worth adding on to. Our preference is a new home, but having visited a number of open houses, we are not very impressed with what we are finding. Should we consider building a custom home?

A major advantage of a new home already constructed (often referred to as a “spec home”) is that it is move-in ready and the headaches of construction have been managed for you. You also get to see exactly what you are buying.

Two downsides to a spec home:

  1. You are stuck with someone else’s design choices.
  2. You are paying market value for the home, which may be more than the cost of building a custom home.

When deciding between buying a spec home or building a custom home, keep in mind that there is not much extra land sitting around Arlington that is just waiting for you to build on. You will be lucky to find anything desirable if you search the MLS for land in Arlington. Good teardowns can attract competition from builders and investors who are able to pay cash. So even if you have the funds and inclination to build a custom home, finding a lot that suits you may be easier said than done.

You mentioned that your current home is not worth adding on to, but you may want to consider whether it is a good teardown candidate. There are a number of terrific builders who specialize in building on your lot. Depending on your tastes and requirements, you may find this to be quite an affordable option.  Items to consider:

  • How will the new home blend into your existing neighborhood?
  • Will the upper end of home prices in your existing neighborhood support the total investment you are considering?
  • Will the size and shape of your lot support the home you want to build?
  • Are there any Arlington County zoning restrictions that may get in the way of your plans?

If you decide to build a custom home but do not use your current lot then I recommend working with a REALTOR® who has experience with finding lots and set a realistic timetable.  In the meantime, it is a good idea to start interviewing builders. I know of a few good builders that tend to have a portfolio of lots, which could be a home run if you like their work, pricing and the lot(s) they have available.

You’ll also need to explore construction financing. This niche service tends to be dominated by the local banks and the terms have become increasingly convenient. Some programs allow you to wrap into one loan, the cost of the lot and construction. I’ve even seen down-payment requirements as low as 10%.

Builders almost always have a number of models for you to choose from. It’s usually less expensive to go with one of their existing options than to start from scratch.  Some will also allow you to customize the floor plans as well as the finishes. You may not get many chances in your life to build your own home, so I recommend pushing for what you really want. Maybe you will get lucky and find an existing model that works great for you, but if not, don’t be afraid to customize if you can make it work with your budget.

Feel free to contact me directly to discuss your plans in greater detail. Even if we don’t work together, I’m happy to recommend builders and lenders that fit well with your needs. I can also turn you onto homes currently under construction that are not yet on the market, like this one:

If someone is reading this that owns a potential tear down lot, I would love to hear from you as well.  I’m always on the lookout for good lots in Arlington, Falls Church and McLean.

The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of

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