Buying Spec Home

Buying Spec Home By Builders Versus Building New Home

Gustan Cho Associates are mortgage brokers licensed in 48 states

This BLOG On Buying Spec Home By Builders Versus Building New Home Was PUBLISHED On May 6th, 2019

Benefits Of Buying Spec Home:

Buying Spec Home by home builders can offer many benefits for home buyers. Spec homes are new construction homes that already have been built and is furnished.

  • A spec home, also called a builder’s model home, is a home that was built by a home builder to be used as a model home
  • When a builder/developer plans in building homes in 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 the development stage
  • Spec homes are sold after the developer has finished the development stage and there are no more lots 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.

Spec 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 where the architect custom designs the home to suit the owner’s needs
  • Home buyers can customize their custom homes any way they want
  • Car lovers can have a 12 plus car garage built
  • Home buyers who have in-laws or other family members may want to customize it by adding an in-law suite or a second guest home on the property
  • Spec homes are brand new homes built by developers
  • Purpose of spec homes is to be used as model homes for potential home buyers and is 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 it 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 By Developers

Most developers will not sell the existing spec homes until all lots have been sold and/or all homes have been sold.

  • Builders will often offer buyers the existing furniture when buying spec home
  • Home buyers can often get major deals when buying spec home that is furnished
  • 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 spec home are that you may not have your choice of furnishings, appliances, and final finishes
  • The tiles, flooring, paint, cabinets, may not be your choice since the home has already been built

Certain sections of the home may be worn out due to traffic by potential buyers.

Buying Homes By Builders

When buying a home by a developer/builder, buyers will often be steered to their preferred lender. Many builders have separate agreements with a so-called preferred lender. It is a common practice where builders will offer incentives to home buyers 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 own lender. This practice is called steering and often illegal but the practice still continues. Home buyers being steered to the builder’s preferred lender, please beware of this practice and know your rights.

Similar Posts