Sometimes we real estate agents have been in the industry so long that we forget that some of the terms we use don’t always make sense to someone new to home buying. One of those terms is “spec”. Spec is short for speculative and is another name for “inventory home”. It is when either a home builder has decided to go ahead and build a home without having a buyer in place on it, or the builder had previously sold a home and during construction the buyer could not continue with the purchase. In both cases the builder ends up with a home that has already had options and colors selected for it, has started construction (or may already be finished with construction) and this home is available for sale to a new buyer.
Why buy a spec home vs new build?
Even though you lose out on the ability to personalize a spec home to be just the way you want it, there are still some reasons why buying a spec home makes sense vs buying a new build home.
Usually the strongest reason to buy a spec has to do with timing. Since a spec home is already within the construction process (or hey, it might already be complete), you save time when purchasing one. Some people just don’t have the 4-6 months that a typical new construction home takes to get from contract to close, so a spec home helps solve that problem by having a completion timeframe much sooner.
Another strong reason to consider buying a spec home is that they sometimes come with considerable discounts. A complete home that is unsold costs a home builder money each day it remains unsold. For this reason, many specs have additional incentives or discounts added to them to sweeten the deal once they are complete or nearly complete. If a spec home has sat complete for a long period of time and still has not sold, this might be a good home to throw out an offer on to see how motivated the builder is in selling it right away.
For example, Sally Steamboat has a lease ending in two months, and she needs to buy a home that she can close on before then. New construction will not work for her because her builder will take four months to build a home, but they do offer three different specs for her to choose from, and one of them, which turns out to fit her needs, should be complete within the next 45 days. A bonus for Sally is that, because this is a spec home, the builder is offering $5,000 off of the original price and free window blinds with the purchase. This turns out to work perfectly for Miss Steamboat, as she can purchase a brand new home that will be ready for her timeframe and she saves money in the process.
Even though you might be losing out on some personalization when buying a spec home, you make up for it by being able to move into a home sooner, and you may even save some money to boot. You still get the peace of mind knowing that you are purchasing a brand new home with a great warranty, all new components, the latest in construction technology and up to date building and energy efficiency codes. So be sure to check out your local builder’s spec lists and see if one of those homes might be a good match for you.