Buying a home nowadays is tough. Prices keep going up, and homes get sold super fast – around 14 days on average, says the National Association of Realtors.

If you’re thinking about buying, consider a spec house. It’s a new house built without a specific buyer in mind. They're often cheaper than other new houses and ready to move in.

Is a spec house right for you? Here’s what you need to know.

 

What Is a Spec House?

A spec house or speculative house is a new home built by a builder without a buyer lined up. The idea is to make a house that'll sell quickly for a profit. These homes are made to attract buyers right away.

In simple terms, a spec home is based on what buyers want. Builders add excellent features and build them in good areas. Builders pay attention to what's popular in real estate and where to build these homes.

 

Costs of Spec Houses

Spec homes are typically cheaper per square foot than custom-built or personalized production homes. Good builders invest in reliable home plans to ensure well-constructed houses, aiming to offer buyers a good deal on quality homes.

What Factors Affect the Price of a Spec Home?

Several things affect the price of a spec home:

• The number of available property lots
• What extra features and upgrades are included
• The values of nearby houses in the area
• How the home is designed
• The quality of materials used
• The size of the house
• How much people want to buy it

Can You Negotiate the Price of a Spec House?

Builders often make several similar spec homes, so the price is usually fixed. They might want to avoid negotiating and prefer sticking to their set price. But depending on your situation, you could still try to haggle.

One way is to ask the seller to cover your closing costs. When finalizing the home purchase, you pay these fees, like lender fees, appraisals, and title searches. If the house isn’t built yet, you might negotiate for better stuff like fancier cabinets or more excellent carpets. This means getting a better home for a lower price.

But remember, sometimes spec homes are sold as they are. If you want changes later, it's usually on you, and the builders might not agree to upgrades.

 

How to Purchase a Spec Home

Buying a spec home is like buying a regular house. You must figure out how to pay for it and what kind of loan works best. The good part is that getting a spec home is usually faster than getting a custom-built or brand-new house because spec homes are ready to move into.

To speed things up even more, you can get pre-approved for a mortgage before you start looking for a home. If you're set on buying a spec home, going through the approval process shows that you're serious about buying one. It also helps when you're ready to make an offer on a spec house.

 

Pros and Cons of Spec Houses

Before buying a spec house, consider the good and bad sides. Here are some points to consider if you plan to invest in a spec house.

Pros

• Cost-effective

If you're watching your wallet, a spec house can give you a touch of luxury without breaking the bank. Builders often offer good deals to sell these homes quickly.

• Instant availability

Want a new home but can't wait for construction? A spec home is ready to go right away (or almost). Plus, there is no hassle with contractors.

• Ready-to-go condition

Unlike some pre-built homes, there is no need for renovations or fixes before moving in. Everything is fresh and ready to use.

Cons

• No location choice

With a spec home, you can't pick its location. If you adore the house but not the neighborhood, you should pass on it.

• Limited options

With a spec house, the builder usually decides everything from flooring to paint, leaving fewer choices for you. While you can select finishing touches like light fixtures or cabinet pulls, significant things like the roof can't be customized. You can remodel it later, but it'll cost more.

• Possible unnecessary expenses

Since you can't customize a spec house, you might pay for features you don't need, such as a three-car garage when you only have two cars. Even if the spec house is reasonably priced, it's not a good deal if you're paying for features you won't use.

 

FAQs About Spec Houses

Here are some commonly asked questions to help you better understand spec houses.

1. What’s the Contrast Between a Spec Home and a Custom-built Home?

Well, a spec home is a house ready to move into. It's built with features that builders think lots of buyers will like. On the flip side, a custom-built home is one-of-a-kind. Someone asks for it to be made just for them, with all the specific things they want in the house.

2. Can You Modify a Spec Home?

Usually, you can't make significant changes to a specific home. The builder decides everything about how it's built, even the look, such as paint, siding, and landscaping. If you buy it while it's being made, you might have a chance to tweak things, but it's not always sure.

3. When's a Good Time to Buy a Spec House?

You can buy a spec house whenever you're hunting for a new place. In busy markets, they're attractive to buyers who want a new home without the trouble of building one. These houses often show up for sale in the best-selling seasons from spring to early autumn. Remember, in areas with harsh winters, fewer spec houses might be on sale in colder months. So, if you're eyeing a spec home, it's best to check during spring, summer, or fall when more options could be available.

 

The Bottom Line

Buying a spec house has limits, such as no bargaining on price or picking your floor plan. Yet, it's a budget-friendly choice ready to move into, attracting both homebuyers and real estate investors.