Collins Builders, a six-year-old production builder based in Jacksonville, Fla., launched its off-site division in 2007, and expects to contract with at least 15 lot owners this year. Danny Britt, who manages this division, says that on-your-lot buyers typically demand more customization of the homes they purchase.
Britt and other builders agree that on-your-lot construction is a custom-home business, regardless of how many house plans a builder has available to choose from. (In its literature, Collins states that it has no fewer than 11 scheduled meetings with lot owners during the construction process.) Schumacher Homes, for example, has 250-plus plans, but what gets built, says Schumacher, is almost always dictated by an owner’s tastes, priorities, budget, and lot location. (He points out that customers can use one of its plans to design their own house from his company’s Web site.)
“They already have the location, so what we need to provide is a great experience and product,” says Post. Wadley adds that buyers “are sizing us up against other custom builders in the area,” and that the design process alone for off-site construction can take two or three months.
Because customization is demanded by on-your-lot customers—“so they can call their house their own,” says Schumacher—construction costs are all over the map. Stanton Homes in Raleigh, N.C., is building 2,200- to 3,200-square-foot houses on scattered lots for between $90 and $150 per square foot, says Penny Hull, this builder’s vice president of business development and operations. “Plus, we’re offering a ton of advice to customers who aren’t that anxious to buy in the first place.” Seda’s starter homes begin at $68 per square foot, says Semanik.
Post says Wayne Homes resists marketing its homes on a per-square-foot basis because that would “commoditize the product. We’re more about value.” Wayne targets entry-level and first-time move-up customers with 1,300- to 3,000-square-foot homes that sell in the $130,000 to $180,000 range.
Wayne Homes and other off-site builders seem to rely heavily on their longevity in a market and the word of mouth generated from satisfied customers as their main marketing avenues. “We’ve been doing ‘my plan on your land’ for 27 years,” says Semanik. Hull says Stanton Homes conducts “outreach events” with lot owners and real estate agents, with whom it also connects through its Web site and other social networks.
Wide Price Range: Construction costs for on-your-lot homes depend on buyers' preferences, the extent of site preparation, and other factors. Collins Builders in Florida can construct a starter house with a 2-car garage for $56 per square foot; but it also recently contracted to built a larger, more elaborate house for almost double that amount.
However, these builders might need to step up their promotional efforts, as more builders take on scattered-lot construction to get them through the recession. “They’re getting into it, even though they don’t advertise the service,” says Collins Builders' Britt about some of his competitors. Wadley of David Weekly Homes wonders, though, about other builders’ long-term commitment to this customer. “I don’t think they realize the upfront costs in people,” he says. Weekley, for example, maintains two satellite sales offices for its off-site division, which is also supported by a 14,000-square-foot headquarters facility that includes a design center as well as room for designers and eight to 10 salespeople.
Wadley also notes that in a sprawling market such as Houston, the productivity of contractors that Weekley hires for scattered-lot construction must be measured differently. “They have a lot of windshield time” driving from job to job, explains Wadley, so the number of homes they can build is lower than what a contractor working in a concentrated subdivision might complete in the same amount of time. (Weekley’s off-site division builds within a 50-mile radius of its headquarters, but will go out another 20 miles for an extra fee.)
The builders interviewed for this article hesitate when asked how many homes they’ll close with on-your-lot buyers this year. Post thinks Wayne Homes’ business might be off another 10%. But to a person, each of these builders is optimistic about the future. Wadley says Weekley is hoping its off-site division can pick up business in Galveston, where Hurricane Ike wiped out 3,000 houses. “The potential is there, but right now those people are having appraisal and insurance problems.”
John Caulfield is senior editor at BUILDER magazine.