Buying a home can be a headache. You need to find something in your budget, make a competitive offer, and hope nothing major comes up in the inspection. It’s no wonder many buyers opt for a spec home instead.
“When you buy a spec home, you’re not just buying a house but a new one,” says Filippo Incorvaia, broker and CEO of FI Real Estate in Miami. “This means you get everything new, from factory warranties for appliances to equipment throughout the home, including plumbing and the roof.”
So what are spec homes, and are they the perfect solution for everyone? This article looks at the definition, features, pros and cons of spec homes, and whether you should consider one.
What Is a Spec House?
A spec house is a term short for a speculative house. The home type gets its name from the idea that builders are speculating what the average buyer is after in their home search and catering to those individuals.
“A spec house, or ‘speculative house,’ is a new construction home that is built to be sold, generally pretty quickly,” says Shannon McMahon, National Homebuilder Partner Manager at Opendoor. “It’s called a ‘speculative house’ because builders speculate that they will be able to easily sell it, as it has features that the general home buyer population is looking for.”
Spec House vs. Custom Build House
Spec homes usually have some key features. First, they’re new builds done with the latest design trends. “Home builders who construct spec houses are keenly aware of housing trends and aim to build for the moment, or for what they anticipate to be the next trend,” McMahon says.
Spec homes are often built quickly, which is a perk and a feature of the fact that they’re not custom builds. “Spec homes have pre-set layouts, so they are generally built in a shorter timeframe than buildable plans,” McMahon says. “They are considered move-in ready immediately after they’re built.”
Because spec homes are new builds, their locations are often unique compared to custom builds. “Spec homes are often built to create completely new neighborhoods, so they’re often located in communities on the outskirts of town and more suburban areas,” McMahon says.
They also differ from custom homes in that they eliminate many choices a buyer would have to make when commissioning a new home. “Custom-built homes tend to be a cut above the rest because someone has decided this is their home, and they are involved from the beginning, and tend to choose higher-end options,” says Cindy Raney, founder of the Connecticut-based boutique real estate firm Cindy Raney & Team. “However, they require a lot of work, time, and decision-making. You have to be willing to take that on. With a spec, you walk in and it’s finished. You can move right in!”
Pros of Buying a Spec Home
The main perk of a spec home is that it’s built quickly. “A spec house is a great option for a buyer who may have a shorter time frame to move, someone who needs to move quickly for a job, or a couple just starting their family with a baby on the way,” says McMahon. “Spec homes are also a good fit for someone who doesn’t want or need a completely customized home but is still looking for the latest design trends.”
Spec homes are also new, meaning you won’t have to worry about the problems that come with older homes. “You are getting a brand new, move-in ready home,” Raney says. “You get to enjoy the convenience of buying a new property without having to wait months or years for completion.”
Most spec homes come with a one-year warranty. If anything goes wrong within the first year, the builder must fix or replace it.
The one-year warranty is a huge benefit, says Incorvaia. “This benefit, along with the peace of mind it brings, is truly invaluable. The security of knowing any problem can be replaced or fixed is truly priceless,” he says.
It’s also common for spec homes to be affordable compared to other options on the market. “In today’s market, many buyers’ budgets are being squeezed by high home prices and interest rates. Because many builders offer special incentives for spec home purchases, they can be a more affordable option for buyers,” McMahon says.
Cons of Buying a Spec Home
There are also downsides. Folks who don’t like spec homes usually find that they’re not unique or custom enough for their tastes.
“You may be limited on customization and upgrade options—from smaller items like fixtures and flooring to larger decisions like room layouts and neighborhoods,” McMahon says. “That can be a letdown for some buyers, so I always recommend having conversations upfront with the builder about what your options are so that there aren’t any surprises when it comes time to purchase the home.”
You might have the option to choose certain finishes, even if it’s from a list of choices. “Some builders offer customization for smaller, last-minute features like door knobs, counter pulls, overhead lighting, and paint colors,” she says. “I always recommend buyers to ask about these options with builders as they’re looking at different spec home companies because you never know until you ask!”
These homes are designed to appeal to most buyers, but trendy looks aren’t necessarily right for everyone. “Spec homes can be vanilla or plain and/or trendy,” Raney says. “For example, they may install brass fixtures if that is what is trending, but they may go out of style in a year. It may not be a timeless design.”
Spec homes are often designed without superfluous features and many come without features such as window treatments or landscaping, which can be an added cost for buyers down the line. “It might not be completely your taste, so you may need to put money in to make it your own,” she says.
Finally, depending on who builds a spec home, you could be dealing with homes that were built quickly and whose builders cut corners. “If you buy from someone who isn’t a great builder, it could be a poor product with eventual issues,” Raney says.
Should You Buy a Spec Home?
There are tradeoffs to buying a spec home. On the one hand, you can usually move into them quickly, and they offer the newest design trends. On the other hand, they’re cookie-cutter homes, and you won’t always get everything on your checklist when purchasing one. For that reason, many buyers opt for a completely custom home.
“A custom home is a new build where the buyer requires a general contractor, which is typically very expensive, to build it to their exact specifications,” Incorvaia says. “It generally is far more costly, but there is more attention to detail. Custom buildings tend to have finishes that are far more personalized.”
Therefore, deciding whether to purchase a spec home involves weighing these options and deciding what’s right for you.
“I recommend taking a careful look at the aspects of the home that you won’t necessarily be able to change and make sure you’re content with them—for example, the location, lot size, and floorplan,” McMahon says, adding that shopping for a spec home should be approached like shopping for any type of home.
“If you’re not planning to move again soon, can you picture yourself living in the home for at least 5-10 years? Come with a list of your non-negotiables, and remember that home attributes like countertops, flooring and paint can always be changed in the future,” she adds.
