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Exploring What is a Spec Home: Benefits And Considerations for Buyers

What is a spec home? It’s a property built by developers on speculation, with the aim of attracting a buyer once it’s completed. Skipping the customization stage of building a house, spec homes typically offer coveted features and quick move-ins. If you’re considering the path of a spec home purchase, you’ll find comprehensive insights here on their benefits and limitations.

Key Takeaways

  • Spec homes, constructed without a specific buyer in mind, offer quick move-in times and require less buyer involvement in design, making them a convenient choice for those who prioritize speed and simplicity in purchasing a new home.

  • While spec homes are cost-effective and generally offer high-end finishes in desirable neighborhoods, buyers face limited customization options and have no input on lot selection compared to custom-built homes.

  • Potential buyers can find, evaluate, and negotiate spec homes using specialized websites, assessing builder reputations, and leveraging market conditions or builder incentives for the best deal.

Defining Spec Homes

Exploring What is a Spec Home: Benefits And Considerations for Buyers 1

A spec home, which is short for speculative home, is constructed by builders without a specific buyer in mind. It is built in the hope of attracting a buyer after completion. Unlike custom homes where you get to be part of the design process, spec homes offer limited designer options and finishes, with construction decisions made by the builder to meet the general market demand. Think of a speculative house as a ready-to-move-in, brand new home designed to appeal to a wide array of buyers.

But how do they differ from other homes on the market? Let’s dive deeper.

Spec Home Characteristics

Spec homes have a certain charm about them. They’re characterized by pre-determined designs decided by builders before the construction begins. Although they may lack unique features, they often feature high-end finishes and are located in desirable neighborhoods, which significantly increase their market appeal.

This means that you are likely to find a spec home that fits your budget and desired location, even if you can’t customize every detail to your liking.

Spec Home vs. Custom Home

When it comes to custom homes, the name says it all. They’re designed and built according to the homeowner’s specific desires, allowing for extensive personalization in collaboration with designers. On the other hand, spec homes offer minimal customization for the buyer, with most features standard and chosen to appeal to a broader market.

While custom homes may seem appealing, they often carry a higher price tag due to personalized selection of building materials and design elements. Additionally, building a custom home requires significant time and involvement from the homeowner throughout the planning and construction process, similar to what one might experience with a custom house project.

So, if you’re looking for a less time-intensive option, a spec home may be the way to go.

Spec Home vs. Model Home

Model homes and spec homes are two different types of homes in the real estate market. Here are some key differences between them:

  • Model homes serve as display homes before being sold once the subdivision is nearly full.

  • Spec homes are built with the intention of being sold directly to homebuyers.

  • Spec homes generally come with more premium features and are considered more luxurious and customizable than model homes.

  • The pricing of spec homes is typically higher compared to that of a model home within a subdivision.

However, buying a spec home that was previously a model home can offer the benefit of moving into a move in ready home within a community with reduced construction activity and a more settled environment.

The Appeal of Spec Homes

Illustration of a quick move-in calendar with a checkmark on the move-in date

Spec homes, also known as spec houses, are not just about limited customization options and quick move-in times. They cater to a specific market of buyers who value cost-effectiveness, reduced stress, and the ability to secure a new home without the typical waiting period of custom builds. This makes them particularly appealing to buyers in a fast-paced real estate market.

Let’s explore these appealing factors further.

Speedy Move-In

Imagine this scenario: you need to move into a new home quickly, but the thought of waiting for a house to be built from scratch sends shivers down your spine. This is where spec homes come in. Being usually nearing completion or already constructed, they offer quicker move-in compared to homes built from scratch.

The benefits of purchasing a spec home include:

  • Expedited purchasing process due to their ready-for-occupancy status

  • Faster homeowner transitions, avoiding the need for temporary housing

  • Seamless transition to the new property


When it comes to the financial aspect, spec homes shine bright. They are often more cost-effective per square foot compared to custom-built homes, providing a budget-friendly alternative with known upfront costs. Builders design spec homes using strategies such as cost-effective locations and bulk material purchasing to keep constructions costs low while ensuring quality.

In areas with high demand and few available properties, spec homes can provide better value when compared to other housing options in the housing market.

Reduced Stress

Let’s face it, building a home from scratch can be stressful. There are so many decisions to make and the process can be overwhelming. This is where spec homes come as a breath of fresh air. They provide a more straightforward purchase process by offering pre-determined designs and finishings.

The simplicity of the spec home buying process leads to a less stressful experience due to limited buyer involvement in construction decisions.

Potential Drawbacks of Spec Homes

Illustration of a spec home interior with limited customization options

While spec homes offer a range of benefits, they do come with a few potential drawbacks. These include limited customization options, a potentially generic appearance, and plot selection constraints. It’s important to be aware of these limitations to make an informed decision when considering buying a spec home.

Limited Customization

When it comes to spec homes, what you see is what you get. They are designed in advance by the builder, which means floor plans, interior and exterior elements, and utility integrations cannot be altered by the buyer.

After the spec home is constructed, customization is mainly confined to non-structural elements, allowing buyers to personalize their space with choices in paint colors, window treatments, and storage solutions, ultimately creating their dream home.

Generic Appearance

Spec homes might not win the beauty contest when compared to custom-built homes by quality home builders. Due to their standardized fixtures and finishes, they may have a more generic appearance.

While this might not be an issue for all buyers, those looking for a unique and distinctive home might find this to be a potential drawback, especially for a particular buyer.

Plot Selection Constraints

Plot selection is another area where spec homes might fall short. Since these homes are pre-built on plots chosen by the developer, buyers have no say in the orientation or specific location of their property. This lack of control over plot selection could be a potential drawback for some buyers.

How to Find and Purchase a Spec Home

Illustration of a real estate agent showing spec homes to potential buyers

Now that you have a clear understanding of what spec homes are and what they offer, you might be wondering how to find and purchase one. This process involves locating available homes, evaluating builders, and negotiating the deal. Let’s break down each step to provide you with a clear roadmap.

Locating Spec Homes

The first step in the journey of buying a spec home is finding one. Prospective buyers can find a comprehensive collection of new construction home listings, including spec homes, on specialized websites such as NewHomeSource.

Before signing a contract, home buyers have the opportunity to view and examine spec homes to inspect the quality and confirm that the homes meet their standards, which helps to attract buyers.

Evaluating Builders

Once you’ve located a potential spec home, the next step is to evaluate the builder. It’s essential to research the builder’s past projects and inquire about warranties offered on the spec homes.

For a comprehensive evaluation, potential buyers should speak to individuals who have previously worked with home builders to gain insight into their experience.

Negotiating the Deal

Now comes the final and perhaps most crucial step – negotiating the deal. While spec homes might seem like a fixed price deal, there’s always room for negotiation depending on market conditions. Some negotiation tactics to consider include:

  • Requesting upgrades or additional features

  • Asking the builder to cover closing costs

  • Negotiating a lower price based on market conditions or comparable sales

Negotiation, often with the help of a real estate agent, can help you secure the best deal on a spec home.

Investing in Spec Homes: Pros and Cons

Illustration of a scale balancing investment benefits and drawbacks of spec homes

Apart from homebuyers, spec homes also attract investors. Investing in spec homes can be a profitable venture, given their rapid completion times and wide market appeal. However, like any investment, there are pros and cons that need to be considered.

Investment Benefits

Investing in spec homes offers several benefits. The total cost is generally transparent, with no hidden costs or construction surprises, reducing financial risk. Spec homes also allow for inspection before purchase, ensuring quality and workmanship.

Additionally, spec homes typically include standard features that are attractive to a broad market, making them a more hands-off investment compared to custom homes.

Investment Drawbacks

Despite the benefits, investing in spec homes has a few potential drawbacks. The limited customization options in spec homes can result in a generic appearance, which may affect the resale value despite being initially designed with the latest buyer tastes in mind.

Timing Your Spec Home Purchase

The process of buying a spec home doesn’t end at finding the right home and negotiating the deal. Timing your purchase can also play a crucial role in getting the best value for your money. This depends on various factors, including market conditions and builder incentives.

Market Factors

Market conditions can significantly influence the timing of a spec home purchase. For instance, purchasing a spec home may offer less financial uncertainty regarding interest rates since the timeframe to closing is typically shorter, lessening the risk of rate fluctuations.

Builder Incentives

Builder incentives, such as covering closing costs or offering free upgrades, can make certain times more opportune for purchasing a spec home. Economic pressures such as high mortgage rates have led builders to offer incentives as a strategy to enhance affordability and value for buyers.


In conclusion, spec homes offer various advantages, such as speedy move-in times, cost-effectiveness, and reduced stress. While they may have a few drawbacks like limited customization options and generic appearance, their benefits make them a viable option for many home buyers and investors. So, next time you’re in the market for a new home, why not consider a spec home?

Frequently Asked Questions

What is a spec home?

A spec home is a house built by constructors without a specific buyer in mind, designed to appeal to various buyers and ready for immediate move-in. It’s a great option for those looking for a new home without going through the construction process themselves.

How does a spec home differ from a custom home?

A spec home is built by the builder with limited designer options and finishes, based on general market demand; whereas, a custom home allows buyers to have a say in the design process.

What are the benefits of buying a spec home?

Buying a spec home can offer you benefits such as speedy move-in times, cost-effectiveness, and reduced stress as you won’t be involved in the construction process. It can be a great option for those looking for convenience and ready-for-occupancy homes.

Are there any drawbacks to buying a spec home?

Yes, buying a spec home may limit customization options, result in a generic appearance, and have plot selection constraints. Consider these factors before making a decision.

When is the best time to buy a spec home?

The best time to buy a spec home is during periods of lower demand or when builders offer incentives, as this can be advantageous for potential buyers.

About the Author

Brian Quigley
Brian Quigley
 NMLS# #244003

Brian Quigley has been in the Denver mortgage industry since 2003. Customer satisfaction has been his top priority while guiding clients through the home loan qualification process. He is proficient in all types of mortgage financing including FHA/VA, Conventional, USDA, Jumbo, Portfolio, 1031 Exchanges, Reverse Mortgages, Refinancing, Construction loans, and FHA 203K loans.

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