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Home Building: The Customizing Conundrum

July 23, 2014 | Professional Builder

By Mike Beirne
Three production home builders deal with handling options and change orders as their markets become more active....
Summerhill Homes, San Ramon, Calif., has had a change-order fee for years but has rarely assessed it.
“When a buyer is requesting a change post-cutoff date, we say no,” says Robert Freed, president and chief executive officer of the Summerhill Housing Group, which includes the single-family home building division and Summerhill Apartment Communities, the multifamily residential development arm. “That is based on a whole lot of years of experience. Every time I said yes, it got screwed up. It’s just a matter of trying to keep design and production on track, and our contractors have a schedule. Every time I tried to do a good deed it backfired, so we stay very disciplined about our cutoff dates.”
Summerhill builds infill homes in the San Francisco Bay Area. Its average selling price is about $1 million, and the bulk of its buyers work in the high-tech sector and are looking to live in locations that are close to work and quality schools. The roster of customizing choices are preselected by the builder and organized into groups one, two, and three and each group is assigned deadlines for submissions. The first two categories include room options, appliances, fixtures, and electrical considerations. Group three choices involve end-of-construction phase selections such as countertops and window coverings.
Salespeople spend much of their time making sure customers understand the options that are available, which ones are included in their house, the deadlines for submitting their selections, as well as being aware of how their choices are connected and affect construction scheduling. When the sales manager and options coordinator are speccing a house for each of the option groups, a preselection form is submitted to Freed for his approval.
“The only reason I need to approve it is not because I’m a designer, or I know better than they do,” Freed says. “It’s because it requires them to know that once (the plan) is approved by me, they are set. If there is a request to change something past the cutoff date, they also know they’re going to have to ask me, and I’m going to say no. It just doesn’t happen.”
The Bay Area is a strong sellers market, so there hasn’t been much push back from buyers to the builder’s efforts to restrict customization options and enforce deadlines. However, Summerhill is planning to enter the luxury production home building market, where average selling prices range from $3 million to $3.5 million. Freed expects his company will have to expand the catalog of custom choices and even allow clients to bring more of their own options to the table. But those choices still will be selected during the sales process, well before scheduling begins for ground breaking.
“Our sales people will have to be very specific, consistent, and clear on the message because buyers will be very demanding,” Freed says. “The profile of these buyers will be strong-willed individuals with a high level of expectations, so there will be a more intensive management of those expectations. That will be as important as ever at this stage on our side because if we start allowing change orders to occur past the cutoff date, our production schedule and our cost structure will be off, and at the end of the day we’ll have an unhappy buyer just because we didn’t deliver the house on time, and the expectations they had didn’t pan out.”

Full Article here


SummerHill Homes is a nationally-recognized home builder focusing on the unique needs of the San Francisco Bay Area and Southern California. SHH has earned recognition and respect as one of the nation’s premier residential community builders. The company is renowned for developing specialized single-family detached and multi-family housing communities in established residential settings throughout California. Since its inception in 1976, SummerHill Homes’s goals have been to provide quality homes for its customers, Communities of Distinction for cities, and sound business opportunities for its partners.


SummerHill Apartment Communities is the leader in providing quality, smart growth, multi-family rental housing and mixed-use developments located throughout the western United States. SHAC defines excellence in customer relationships, the quality of products and in every aspect of operations. Criteria for site development are highly selective to meet the company’s objectives. SHAC uses extensive market analysis to identify housing needs, and then customizes each development to achieve the highest potential.

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