What is a Spec Home?

What is a Spec Home? The benefits and risks of buying or building a Spec Home.
asked Dec 17, 2012 in Real Estate by answernest

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In the realm of home construction, more and more contractors are building spec homes as compared to custom homes.  A spec home is a home that is built according to predetermined specifications, set by the contractor, with the idea that the home will be sold once the house is built.
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In years past, a homebuyer would go to a contractor and plan the layout and design of the home before construction would begin.  With spec homes, the house is planned, designed, and built before a prospective buyer has been found.  Spec home building has the benefit of speedy construction but offers the risk, once the home is built, of not finding a buyer, even though the money has been spent in construction of the home.  Even though spec home building is a risky investment, it offers a tremendous return on investment, making it worth the risk to many contractors.

answered Dec 17, 2012 by answernest