Real estate terminology can get quite confusing. There are many terms to keep track of and if you are not familiar with them or new in real estate it can be hard to keep up with. You may hear the phrases “feature houses” or “showcase homes”. You may also hear someone refer to a house as a “spec house”. Although these may all sound different, they actually all mean the same thing. This article will discuss exactly what a spec home is in real estate.
What Exactly is a Spec House?
Are you maybe asking yourself, what is a spec house? A spec house is any house that is completely move-in-ready. They are a very popular type of home that is built all around the country. In spec homes, the entire layout of the home is determined by the builders before the home is built. They are also built before a buyer purchases the home. This is because it is “speculated” that the home will sell fast and be a popular option to people looking to purchase a home.
A spec house is sort of a weird phenomenon in the real estate world. You would expect people who are making a big purchase, like buying a home, to have a lot of opinions and customizations to their home to fit their family’s specific wants and needs. Instead, a lot of people prefer the convenience of a move-in-ready home. They don’t as much care about the layout of the home or specific features. Any customizations they want would happen after the home is purchased, and are usually more cosmetic than construction-based customizations.
A spec house is a convenient option for people looking to buy homes who are not as interested in the specifics of construction. Most people don’t have the time and money to wait for their dream home to be built from the ground up. This makes spec homes a very popular option for homeowners. Additionally, the fact that a spec house is so popular makes them desired by real estate investors as well. Investors view spec homes as a great investment opportunity as an income property. Whether they are looking to fix and flip a spec home or use it as a rental property, investors see income fairly quickly in a spec house.
If you are an investor looking for spec homes in your area, Mashvisor’s Property Finder is an effective way to discover investment properties in your area. This property search tool makes it easy for investors to see spec homes in any location. Thanks to its use of advanced AI as well laser-focused filters, real estate investors are only a few clicks away from finding an income property that matches their needs and investment goals.
What are the Pros of a Spec House?
Spec homes are very convenient and appealing to many types of home buyers. As a move-in-ready house, it is one of the easiest types of homes to buy and get situated in a quick manner. Below are the benefits of buying a spec house.
Spec Homes are Relatively Available
These types of homes are becoming even more common as they are extremely popular among home buyers. Builders and real estate investors are building more and more spec homes because they know the home will sell fast on the real estate market. It is possible too as a potential home buyer that you can work with the builders of the spec home they are building and add in any simple customizations you may want. This would only be able to happen if you found a spec home being built in its early building phase.
Working with a developer and builder is much more convenient than attempting to build a house from the ground up, completely designed by you. Finding a spec home in its early stages means there already is some foundation and layout in place for this home. You will not need to stress about building the layout of the home, as the work will have been done for you. Additionally, the home will already have all of its permits approved by the town. You don’t need to worry about any of the stressful things, you can just show up and work with the builders to make customizations you may not have had the opportunity to once the house was completed.
Even if you are not interested in a custom house, spec homes are always available due to their demand and ready to move in after they are completed. You can tour the house one day and move in the day later. This factor is convenient for homebuyers of any type and makes spec homes a popular style of house in the real estate market.
Spec Homes are Affordable
Not only are spec houses extremely convenient for potential home buyers, but they are also relatively cost-effective. These homes’ cheap price is done on purpose by the builders and developers to make sure the home sells quickly once it is built. As spec homes usually do not have a buyer until after they are completed, builders, developers, or investors have to front the cost of building this home. They have to make sure the home will sell almost immediately once it is built. As a move-in-ready, affordable home, spec homes will be sold right away once they are completed.
Now, what makes spec homes more affordable? You may be thinking these homes are affordable only because of poor construction and materials when it is actually the opposite. The construction of spec homes is so efficient that these homes are able to be built as quickly as they are. Builders and developers make blueprints that will ensure an easy-to-build home that is sturdy. The efficient construction, therefore, cuts down on costs of building the home, and builders are incentivized to build the home fast, and at a good quality, so it will sell faster and they make the money back on their investment.
Spec Homes Have Good Amenities
Buying a home can be very complicated. Depending on the type of home you purchase or the location of the home there may be many decisions you need to make regarding the appliances, countertops, or any additional amenities in the home. This may be even more complicated if you purchase an older home. Older homes may not be equipped to hold modern-day appliances. This would mean many renovations would need to happen after you purchase the home to accommodate those new appliances. Even if the cost of the home want that expensive when you purchased it, all of these upgrades can add up in the end.
You will not need to worry about any of these factors when you buy a spec house. The decisions about amenities such as appliances and certain aesthetics of the home like countertops are all done by the builders and developers. They base their decisions on what home buyers have liked in the past, and what sells the home quickly once it is completed. All of these styles and amenities will be current, so you won’t need to worry about changing them once you move in. Even if there are one or two things you decide to change, you will not need to worry about upgrading any parts of your house to accommodate any certain appliances, and spec homes are built to hold modern appliances.
What are the Cons of a Spec House?
With any type of property, there are benefits and drawbacks. As some of the pros of a spec house are mentioned above, here are some cons of a spec house to consider before you purchase one:
Spec Homes Have a Stale Factor
Although spec homes are super convenient as they are built to be move-in ready, this can also be its biggest drawback. Typically, the home buyer has no say in the construction, layout, and certain features of the house. The house will already be completely built and ready for them to move in once they buy it. The final product of the home will most likely look like every other house on your street or in your neighborhood. Only simple cosmetic changes can be done to make the home appear different from your neighbor’s house.
Simple cosmetic changes you can do to the interior of a spec home are changing the paint color of the house, or adding landscaping to your yard that is unique to the neighborhood. You can also change interior parts of the house to fit your aesthetic, although those changes won’t be noticed from the outside.
In some rare cases, home buyers can work with builders and developers of a spec home if they find the house in its very early stages of being built. In this case, you have more of an opportunity to change bigger aspects of the house that may make it stand out to others in the neighborhood. But even if you find the hose in the early stages, blueprints for the layout and certain features will already exist, so extreme changes may not be able to be done as they might not have been approved by the city.
Spec Homes Sell Quickly
If you are someone who really wants to think long and hard about their home purchase, spec homes may not be for you as these homes sell quickly. Making an offer on a spec house must happen almost immediately if you are interested, as it is likely the house will receive many offers once it hits the market. A spec house for sale on the market will sell quickly, as that was what the builders and developers intended for.
No Say in Location
Even though builders and developers work hard to build spec houses in desirable areas, they may not fit your exact desired location. You will have fewer options when you are looking for a move-in-ready home, as there may not be any in the specific location you want. For example, if you are looking for a spec house near the main road, there just might not be any options. There potentially could be options for other homes on the main road, just not one that is move-in ready. While it is likely you have a say in where the general location is of the spec home you are looking for, you will have less say in the specific location. Be prepared you might not get your exact desired location when buying a spec home.
Why Should I Buy a Spec Home?
You should buy a spec home if you are someone looking for a move-in-ready house. Spec homes are convenient and affordable options for potential home buyers. Additionally, if you are an investor looking for an income property, spec homes may be a good option for you. Whether you are investing in the property as a developer or purchasing it once it’s completed to use as a rental space, a spec house is a sought-after property and will generate a lot of business and make a return on your investment. Buying or developing a spec home is a great real estate investment strategy for investors.
In Conclusion
What is a spec house? It is a move-in-ready home that is convenient for both potential home buyers and real estate investors. Homeowners don’t have to think about remodeling or renovations to their new home, they can simply just move in. Spec homes are also affordable for anyone buying a home, as overall costs of building the house are conserved by efficient construction.
Spec homes make investing in real estate easy. If you are a developer or builder, these homes are built quickly and with the international of the home selling right as it hits the market. This means you will get your investment back and more right away. If you are an investor looking to purchase a spec house to use as a rental or to flip, these homes are very desirable because of their move-in-ready features. You would be able to find a renter or someone to purchase this home in no time. To locate spec homes in your area to invest in, visit Mashvisor and click here to see properties in your area.