Do you like the idea of living in a brand-new home, but don’t want to wait for it to be built? Then buying a spec home might be the perfect solution.
Short for a “speculative home,” this type of house is built without a specific buyer in mind. Builders erect these homes simply expecting they will sell—and they typically do, since they offer numerous benefits to homebuyers.
A spec home usually hits the market and gets listed when it’s nearing completion or is already fully inhabitable. Since buyers aren’t involved in the earlier stages of the building process, spec homes offer little in the way of being customized to an individual’s exact tastes. What they see—from the number of bathrooms to the color of the countertops—is what they get.
While spec homes might disappoint buyers hoping to have some creative control over how their house looks, this lack of freedom is balanced out by the fact that buyers don’t have to wait months to move in as they would with a custom build.
“We all have a vision of what our perfect home would look like, but custom building isn’t always possible—whether due to budget, space, or time,” says Dan Hnatkovskyy, co-founder and CEO of NewHomesMate. “Builders know this, so they develop spec homes that will meet the average buyer’s needs and sell quickly.”
“Spec homes have features buyers typically want, like popular layouts or designs,” says Alex Toth, head of builder development at Opendoor.
Spec home vs. buildable plan: What’s the difference?
While spec homes are designed and constructed by the builder, buildable plans are homes that buyers work with builders to design from the ground up. However, unlike a custom home where buyers have complete freedom over the home’s design, buildable plans offer some customization within a range of pre-existing options.
“A buildable plan is where a piece of land in a development is matched with an existing floor plan for a semi-customizable home where owners may choose aspects like tile and paint color,” says Chris LaMont, an American Standard Homeowning 01 featured instructor and star of the HGTV show “Buy It or Build It.”
As for how long it takes, a buildable home “can take from six to 12 months to finish construction,” says LaMont.
Plus, they “can be more costly due to the extra time necessary for planning and the often more expensive building materials selected by homeowners in the customization process,” says LaMont.
Advantages of buying a spec home
The positives of purchasing a spec home go beyond simply being able to move in quickly. Here are some of the other main benefits:
- On-trend features and styles: “Spec homebuilders keep a close pulse on housing trends, so their design choices are on par with what many buyers are looking for,” says Toth.
- No construction stress: Building a home from scratch—or even just having to make design decisions—can be stressful for some homebuyers. With a spec home, all of the heavy lifting is done for you already. “The benefit of choosing a spec home is that you can leverage the expertise of qualified builders, engineers, and architects,” says LaMont.
- A more finalized asking price: If you purchase a new-construction home before ground has been broken, you’ll be given a base price that doesn’t include extra fees from potential upgrades or construction delays. With a spec home, however, you’ll have a set asking price just like a resale home, so you’ll know what you’re paying. “Plus, you’re not spending in the hopes the final outcome will meet your expectations—you can judge the build quality for yourself before you hand over a dime,” says Hnatkovskyy.
- Faster financing: Since lenders typically won’t finalize a mortgage until a new-construction home has a Certificate of Occupancy and an independent appraisal, purchasing a spec home means you can lock down your mortgage rate faster since a spec home is already nearing completion or totally finished by the time it hits the market.
Potential downsides of buying a spec home
While spec homes can be a terrific solution for someone looking for the benefits of a new-construction home without the wait, there are a few issues that might serve as deterrents to homebuyers.
Here are some disadvantages of buying a brand-new spec home:
- Premium price tag: Generally speaking, brand-new spec homes tend to be more expensive than similar new-construction homes that haven’t been built yet because spec homes often sport extra amenities that will attract buyers, as opposed to the base plan that is offered in the buildable plan. Plus, “In popular communities, some buyers may be willing to pay a premium to get a home that is move-in ready and avoid the wait during the building process,” says Hnatkovskyy.
- No customization options: Every design choice is made by the builder alone without a specific buyer in mind. “The buyer has no input into whether the property has one bathroom or two, whether the floor plan is open or closed, or how many cabinets will stretch across the kitchen walls,” says Hnatkovskyy.
- Lack of control over the building process: You have to trust that the builder has done quality work. One safeguard to consider is asking whether a spec home comes with a home warranty.
How to find spec homes for sale
If you’re looking for a spec house, start your search by narrowing down the neighborhoods and areas where you might wish to live. From there, buyers can check for new-construction homes for sale in the area at Realtor.com/newconstructionhomes.
Builders will typically list spec homes with “estimated completion dates” on them. The closer a home is to being finished, the more likely it’s about to go on the market (if it’s not already listed as for sale).
Also, consider working with a real estate agent who has experience with new-construction homes in the area you’re considering. This pro should be able to point you in the direction of additional spec homes for sale.
Finally, when you find one you might like, show up ready.
“Spec-home shoppers should come to a builder prepared with questions about building timeline, location, financing, and upgrade options,” says Toth.
What to look for in a spec home
It’s imperative to do the proper research ahead of time if you’re thinking about buying a spec home, and that includes checking out the builder.
“Look up the builder’s past work and, with the help of your real estate agent, familiarize yourself with the available warranties in your state, to ensure your specific needs are met and there are no last-minute discrepancies ahead of closing,” says LaMont. “Doing your due diligence when it comes to the builder’s reputation, warranty, HOA fees, etc. will be extremely beneficial in the long run.”
