What is a Spec House?

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It’s no secret that buying a home in today’s real estate market is a challenge for many home hunters. Home prices continue to rise in many markets, and while there are signs of slowing sales, listings continue to move at a blistering pace: the median time on market is only 14 daysaccording to the National Association of Realtors.

To increase your options on the path to homeownership, you may want to consider buying a specific home. It is a new build that was built “on speculation” – not for any particular client but in the hope of attracting one. Not only do spec homes tend to be less expensive than other new builds, but they also tend to be turnkey.

Is a spec home worth your speculation? Here’s everything you need to know.

What is a special house?

Spec house is short for speculative house. This is a new residence built by a professional home builder.

“Typically, specific homes are built on parcels of land that the builder intends to turn into development at some point in the future,” says Kerry Sherin, consumer advocate at Ownerly, a valuation firm. of houses. “These homes offer their future owners the convenience of purchasing a new property without having to wait months or even years for completion.”

To appeal to a wide range of homebuyers, builders are including features they “assume” are things people want in a home, such as an open layout, kitchen islands, walk-in showers , granite countertops or whatever is currently in vogue. in residential real estate.

So ‘specifications’ could also mean ‘specifications’ – the house is based on a set of specifications which are often quite high and state of the art. It is completely ready to move in the moment a potential buyer sees it.

Spec house vs model house

Don’t confuse specific homes with model homes, those examples of homes in a subdivision that demonstrate the type and style of residence in the new neighborhood (something like floor models on display at a car dealership).

Like spec homes, model homes are built on large plots of land by a builder or developer. And both work as showpieces, demonstrating what the developer can do. But model homes are basically show homes that the developer decides to sell once the subdivision is about full. In contrast, spec homes are built to be sold and to attract buyers.

As a result, spec houses are more luxurious. “Specific homes typically have features that are considered upgrades and would not be included in a model home,” Sherin notes. And they are more customizable. “In some cases, the buyer will even have the option of selecting some of the features or finishes of the home, if they buy the home in the middle of construction.” In contrast, model homes are sold “as is”.

Model homes tend to be less unique as they are built based on only a few different floor plans; the builder does not put a personalized touch on each house individually. Also, although they are brand new, they may show signs of wear after months of going through them.

Because of all of this, model homes tend to be less expensive than spec homes.

How much do specific houses cost?

The cost of a spec home depends on a variety of different factors. Some of the factors that affect the price include:

  • Location
  • Square feet
  • Design
  • Amenities/Features
  • Labor cost
  • Land size
  • Construction materials

In general, spec homes are more affordable than some other types of homes. For example, a specific home should be less expensive than a comparable custom home, where you design every aspect of the home, from roofing materials to light fixtures. However, spec homes are often more expensive than the standard new build homes offered by the developer in an area because they are flashier and more finished. They will certainly be more expensive than a model house for a subdivision.

Advantages and disadvantages of spec houses

Before buying a spec home, it’s important to weigh the pros and cons. Here are some things to consider if you are considering investing in a special home.

Advantages

  • More affordable: If you’re on a budget, a special home can be a great way to get a bit of luxury for less. Builders are often willing to offer buyers a deal to ensure their specific homes are sold quickly.
  • No Wait: Love the idea of ​​a brand new build, but can’t wait six months to a year for construction? The specification house is ready immediately (or almost). No need to deal with contractors either.
  • Turnkey requirement: You don’t have to worry about renovations, repairs or upgrades before you can move in, which isn’t always the case with already built homes. Every feature is fresh and new.

The inconvenients

  • You cannot choose the location: With a spec house, you have no control over the location. If you like the house but don’t like the neighborhood, you may have to move on.
  • You have fewer choices: For many people, the whole point of new construction is the ability to build their dream home. But with a spec home, typically the builder has a vision and determines everything from flooring to paint. While you may have some options (choose light fixtures, cabinet handles, or other finishing touches), you won’t be able to customize major elements like the roof. You can remodel later, of course, but that means more money.
  • You could be paying for unnecessary features: Because you can’t usually customize a specific home, you might end up paying for things you don’t want or need, like a three-car garage when you only have two cars. As cheap as the spec house might be, it’s not a bargain if the price reflects features you’ll never use.

How to Buy a Spec House

The process of buying a specific home is much like the process of buying any other home. These homes will usually be listed on MLS and your real estate agent can show you around. You may also have the opportunity to meet the builder who can tell you more about amenities and features, and talk about construction and building materials.

If you want to make an offer on a specific home, you likely have room for negotiation, just like you would with an existing home. However, there is usually a floor price that the builder has set: he must recoup his investment, after all. Remember that these homes are newly built, so they are in pristine condition and have up-to-date features and fixtures.

In terms of financing, most lenders will give you a regular mortgage for a specific home. Before closing, it’s a good idea to get a home inspection, even if the house has just been built. Getting a second opinion from a building inspector or third-party contractor will ensure nothing was missed, no corners were cut, and everything is as it should be before you go any further. before.

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