What Is A Spec House?
When considering a new home purchase, homebuyers generally think of tract homes, spec homes, custom homes, or semi-custom homes. A spec home is a great option if you're looking for a move-in-ready home with great features and the latest design trends.
A spec house is a new home that is designed and constructed speculatively, without a specific buyer in mind. Spec houses are usually built to a higher standard than most tract homes, as the builder wants to have the assurance that the home will sell quickly upon completion. Spec houses are often located in desirable neighborhoods and include high-end finishes and features. A spec house may be worth considering if you're in the market for a new home but you feel overwhelmed with the numerous design decisions involved in building a custom or semi-custom home.
If you're interested in spec houses, this article will look at what they are, how they differ from other house types, and what it takes to ensure they meet your needs before purchasing one.
- Spec houses have all of the design elements selected by the builder.
- Spec houses are built fairly quickly (4 - 7 months) and are usually appealing to buyers who need a move-in-ready home.
- Spec homes have good resale value as they are designed with the latest buyer tastes in mind.
- Spec houses typically do not involve client inputs during construction.
- Spec homes are often listed for sale once the home is a month or two away from completion.
Spec Home Defined
A modern spec house delivers what its occupants want in terms of space, comfort, and convenience. The builder considers what a typical buyer wants in a home and what is selling on the market at that time. A spec house offers minimal customization on the part of the buyer but includes standard features attractive to a specific market.
So if a spec home is not customizable, how does it compare to a custom home?
What Is The Difference Between A Spec Home And A Custom Home?
When purchasing a spec house, the homeowner has little to no say in the home design, interior design, layout, or features. The buyer is simply choosing a pre-built home that was designed by the builder.
A custom home builder offers the homebuyer complete control over every aspect of the new construction process. The buyer works with a builder to select the layout and features of their dream home.
Spec home vs. model home
Developers build a model home to offer buyers a chance to see and experience their new home before purchasing it. Model homes are usually one of the first homes constructed in a new subdivision as they are a marketing tool the builder can use to sell the remaining empty lots. Model homes typically feature premium upgrades to showcase the high-end finishes the builder offers.
Spec homes are built specifically for sale, not as a marketing tool. Spec homes can appeal to homeowners looking for a quick move-in property with great features within their price range.
Spec home vs. tract house
Tract houses are generally built on a large scale with limited upgrades. Think of a tract home as your standard “cookie cutter” house that is part of a larger subdivision.
Regarding costs, tract houses are also generally cheaper since they're mass constructed, have fewer amenities and features, and are designed to look relatively the same. Developers of spec homes generally buy a small parcel of land, build a couple of spec houses, and then sell them. Developers of tract homes generally offer the buyer a choice of a few floorplans and start construction once they have a buyer.
Is Buying A Spec Home A Good Idea?
If you're considering purchasing a spec home, it's important to weigh the pros and cons before making a decision. Below we've listed the advantages and disadvantages of spec homes.
What Are The Advantages Of A Spec Home?
Spec homes are easier to buy in a competitive market
Spec homes can be especially advantageous to buy in a competitive market. If you are trying to buy a home in an area with high demand and limited inventory, a spec home may be your best option. You may be able to get more bang for your buck when buying a spec home.
Spec homes allow buyers to move in quickly
One of the main reasons people choose a spec home is to avoid getting bogged down with building a new home from scratch. Buyers also want to avoid waiting months before moving into their new home. So, if you're like most buyers, purchasing a spec house will allow you to move into a new space almost immediately, so you don't have to spend months living in temporary housing while you build your new dream home.
Spec homes are hands off
Spec homes are not built or customized for a particular buyer, so they typically feature standard finishes and appliances that appeal to the masses. Being hands-off can be an advantage for buyers who don't have the time or the patience to make decisions about every aspect of a custom home, such as custom countertops, paint colors, landscaping, or other upgrades.
You can examine a spec house before you sign a contract
When buying a spec home, you don't have to worry about purchasing a poor-quality house with bad workmanship. You can get a home inspection of the completed house before you close on the home. Inspecting the house prior to closing allows you to ensure everything is up to your standards.
Spec homes offer reduced risk
Another benefit of buying a spec home is that it reduces your risk of unexpected cost increases. When buying a custom or semi-custom home, there are often many unknowns surrounding how much it will cost to build and what problems might arise during construction. These uncertainties can cause anxiety among buyers who don't want to make any mistakes when purchasing their new home.
With spec houses, there are no hidden costs or surprises. The builder will be completely transparent with the cost of materials and may provide you with current and verifiable appraisal values and construction material prices since the home is near completion by the time it is listed for sale.
What Are The Disadvantages Of A Spec Home?
Like any home on the real estate market, there are downsides to buying a spec home every potential buyer needs to pay attention to. Although spec homes are an increasingly popular option for first-time home buyers, consider these factors before deciding whether to purchase a spec home.
Spec homes have limited options and customizations
One disadvantage of spec homes is that you're locked into the design and layout the builder chooses. When you buy a spec home, you're buying what's presented to you by the builder. Spec homes, therefore, may not deliver all the bells and whistles you'd love in your dream home.
Unable to change floor plan
The layout of a spec home is fixed and can't be changed, so you won't be able to add extra rooms or create a layout that suits your family's needs. For example, you might have been hoping for a large primary bedroom with an en-suite shower room, but because there are no options for customization, you'll have to settle for the current floor plan presented by the builder.
You can't choose the plot for a spec home
Another limitation of a spec home is that the builder has already constructed it in a fixed location. So if you don't like the location of your new house, you can't choose a different plot. This limitation if you like the home the builder has constructed but you are not a fan of the specific plot.
Spec homes can be generic
Another disadvantage of a spec home is that they can look somewhat generic. The builder doesn't include personal touches in the hope that the home will appeal to the masses. Keeping the house generic means there's nothing unique about your home that sets it apart from others. Some people prefer having a more personalized home, so it's important to consider whether this is something you want before buying a spec house.
When Is The Best Time To Buy A Spec Home?
The best time to buy a spec home is usually at the end of the year. There are fewer buyers to compete with on offers. It’s also near the financial-year-end for the builder, and they are eager to sell more houses at this time to meet their annual sales goal.
Another factor that affects the price of your new home is market conditions. For example, a downturn in the economy or an increase in interest rates can also affect how much people are willing to pay for homes.
The Cost Of A Spec House
The cost of a spec house can be unpredictable and ultimately depends on the location and features the builder decides to include in the home.
Spec houses are less likely to have top-of-the-line finishes and upscale features that a custom home might have. But the developer may decide to include high-cost finishes to attract buyers with a higher budget.
So how much does a spec house cost per square foot? Here are some rough numbers to get you started:
According to Homeguide, a new house with all the latest materials and finishes will probably cost about $100-$155 per square foot. That would depend mainly on location, building size, and the finishes employed.
What goes into the price of a spec home?
Spec home pricing depends on the size, location, and features.
For example, if you purchase a home in a more affluent neighborhood with good schools and access to public transportation, you'll pay more than if you live in a less affluent area with fewer amenities.
The neighborhood itself affects how much you pay as well—if there are parks, restaurants, or easy-to-use transportation near your property, your spec home could be priced higher than a more standard suburban residential area.
Will The Builder Negotiate The Price Of A Spec House?
The short answer is that spec home builders are less likely to negotiate with you over pricing. While it may seem like they're trying to squeeze every penny out of you, this isn't always true. Builders generally won't budge on their price unless the home isn't selling as quickly as expected. They also want to keep the average price of their housing developments high for future sales. Try negotiating on things like closing costs.
Is A Spec House A Good Investment?
A spec house can be a great investment. These homes come "as-is" and are already complete before you have to make any financial commitments, so they come with several advantages.
Spec homes are affordable
Generally speaking, a spec house is an affordable property compared to a custom home. Because developers build spec homes without a specific buyer, they are often more affordable than custom homes.
Spec homes are less risky
The risk associated with investing in property can be expensive if you're not careful. However, when it comes to spec houses, there is no risk since the developer has already completed the property.
You don't have to worry about new construction home delays or unexpected expenses caused by weather-related events or other issues preventing you from moving into your new home on the estimated move-in date.
Spec homes offer balanced amenities
Providing a balance of amenities that will make life easy for you and your family is also essential. A spec house can be just that — a place to call home that offers the best in convenience and comfort without sacrificing space or value.
And while you're unlikely to find one with all the bells and whistles typical with custom-built homes, you'll also be spending far less to purchase a spec home than a custom home.
What Should I Look For When Buying A Spec House?
When buying a spec house, there are many things to consider. You want the experience to be positive and hassle-free. Here are some tips for evaluating the builder.
Research builders in your area
Before choosing to purchase a spec home, carefully research the builder. Ask a local Realtor who has worked with the builder before and ask neighbors if they have personal experience with them. Look at their portfolios, check their reviews, and talk to people who've worked with them.
Gather reviews on prospective builders
Once you've found a few builders that interest you, gather reviews from past clients or industry professionals who have worked with them. Ask for references from other people who have worked with the builder or read through the reviews online to get an idea of what kind of company they are and how well they treat their customers.
See the houses in person with a Realtor
When looking at homes, it's essential to see them in person. Schedule a walkthrough to get an idea of the quality of the home, location, and amenities. Talk with your real estate agent about how to view the houses on your wish list.
Negotiate a deal (get a warranty!)
When looking at a home and negotiating with the builder, make sure you have an agreement in writing about any warranties included with the sale. Warranties are an essential step in buying a spec house. You'll also want to schedule an inspection from a home inspector before you close on the home, but negotiating is the key to getting the best price possible.
Go through the closing process
Once you have negotiated a deal on the house, the next step will be going through the closing process with your Realtor. This process involves negotiating how much money you're putting down, how much you're paying for closing costs and taxes, and how long it will take to close on the property. The time it takes to close on a spec homes depends on whether or not you also have to deal with any obstacles standing in your way, such as inspection issues or financing issues.
Buying Your Spec House The Fun, Easy, And Affordable Way!
Buying your spec house is a lot like dating. First, you must feel it out, get to know the builder, and see what they're all about. You can't just do an online interview and assume they will be everything you want them to be.
That's where Felix comes in! Our focus is on providing you with all the information you need to help you find the perfect new construction home (or existing home) in Middle Tennessee. We'll help you pick the ideal neighborhood and find the perfect builder.
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