Model of a Custom Residential Home Being Built with plans

Understanding the 3 Main Types of Residential Home Construction

When studying for the Florida Real Estate Exam, you need to know how to distinguish between the 3 main types of residential home construction: Speculative, Tract, and Custom. Whether you are studying for the Florida real estate exam or simply looking to expand your knowledge in the field, understanding these distinctions is important.

The 3 Main Types of Residential Home Construction

  1. Speculative: Speculative home construction involves building a home without a specific buyer in mind. The builder typically owns the land then constructs the home based on their own speculation that it will appeal to potential buyers in the market. These homes are often built in desirable locations and feature popular designs and amenities to attract buyers.
  2. Tract: Tract home construction involves building multiple homes of similar design on a larger piece of land. These homes are often part of a planned community or subdivision and are built by a single developer. As a result, tract homes are typically more affordable than custom homes and offer buyers fewer customization options.
  3. Custom: Custom home construction involves building a one-of-a-kind home tailored to the specific needs and preferences of the homeowner. Buyers have the freedom to choose everything from the floor plan and layout to the materials and finishes used in the construction process. Custom homes are typically more expensive than speculative or tract homes because they offer the ultimate level of personalization.

State Exam Key Points

What you need to know about the 3 main types of residential home construction.

  • Speculative: The builder owns the land and makes all design decisions. eg. floorplan, cabinets, countertops, flooring, etc.)
  • Tract: The buyer makes some design decisions based on options provided by the builder. (eg. flooring, countertops, cabinets, etc. only from the menu provided by the builder – No Special Orders)
  • Custom: The buyer owns the land and makes All design decisions


By understanding the differences between speculative, tract, and custom home construction, you can better navigate the real estate market and make informed decisions as a real estate professional. Good luck with your studies for the Florida real estate exam!

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