This guide covers buying spec home by builders versus building new home. Buying Spec Home by home builders can offer many benefits for home buyers. Spec homes are new-construction homes that have already been built and are furnished. John Strange of Gustan Cho Associates defines a spec home, also called a builder’s model home, as a home built by a builder to be used as a model home.
When a builder or developer plans to build homes on a tract of land that has been subdivided and zoned, they will build a few model homes. These model homes are called spec homes. Spec homes are normally not for sale in the beginning stages of development.
Spec homes are sold after the developer has finished the development stage, and no more lots are available to build. In this blog, we will discuss the benefits of buying spec home by builders. Spec homes are ready to move in. Most spec homes are fully furnished. In the following paragraphs, we will discuss buying spec home by builders versus building a new custom home.
Buying Spec Home Versus Custom Built Homes
Many home buyers often get confused with spec versus custom-built homes. Custom-built homes are homes where buyers purchase the land. They then hire an architect who custom designs the home to suit the owner’s needs. Ronda Butts, a dually licensed realtor and loan officer at Gustan Cho Associates explains about customs homes versus buying spec home from builders:
Home buyers can customize their custom homes any way they want. Car lovers can have a 12-plus car garage built. Home buyers with in-laws or other family members may want to customize it by adding an in-law suite or a second guest home.
Spec homes are brand-new homes built by developers. Spec homes are model homes for potential home buyers and are often referred to as tract homes. Developers purchase a large tract of land with the purpose of mass-building homes. The land is subdivided into lots. Developers will build a series of model homes and furnish them with brand-new furniture. Most builders will have five to a dozen model homes in a new development community. These new model homes are called spec homes.
Benefits Of Buying Spec Home From Developers
Most developers will not sell the existing spec homes until all lots and all homes have been sold. Builders will often offer buyers the existing furniture when buying a spec home. Home buyers can often get major deals when buying a furnished spec home. Amanda Witthauer, a dually licensed realtor and loan officer advises the amount of money homebuyers can save buying spec home versus ordering a new construction home from the home builder:
The cost of furnishing a new home can cost thousands of dollars. Spec homes are in move-in condition. Spec home buyers will not be the first buyers moving into a new community development.
Some disadvantages of buying a spec home are that you may not have your choice of furnishings, appliances, and final finishes. The tiles, flooring, paint, and cabinets may not be your choice since the home has already been built. Certain home sections may be worn out due to traffic by potential buyers.
Buying Homes From Home Builders
Buyers will often be steered to their preferred lender when buying a home from a developer/builder. Many builders have separate agreements with a so-called preferred lender. It is common practice that builders will offer home buyers incentives if the buyer goes with the builder’s preferred lender. Builders will not offer the same incentive if the buyer goes with the buyer’s lender. This practice is called steering and is often illegal, but the practice continues. Home buyers are being steered to the builder’s preferred lender; please beware of this practice and know your rights.
