What is a spec home?
Well, a spec home, short for speculative home, is a house built by a builder that aligns with the current design trends and is something buyers would be interested in purchasing. The builder constructs the house and waits for a buyer to come along and purchase it. Now, the question is, should you consider buying one?
I work with several companies across Oklahoma that specialize in building spec homes. These homes typically range from 1,000 sq. ft. to 5,000 sq. ft., although most fall within that range. My name is Marcie Billen, and I’m a real estate agent based in the Oklahoma City metro area.
Having worked with home builders in our market for several years, I’ve noticed a few reasons why people opt to buy spec homes. Let me provide a more detailed explanation of what a spec home entails. A spec home is similar to buying a resale house, meaning a house previously occupied by someone else. In this case, you didn’t have a say in choosing the design, colors, finishes, or any other aspects of the house. The difference with a spec home is that no one else has lived in it. The builder simply created something they believed a buyer would appreciate.
Currently, in Oklahoma, many people are choosing to purchase spec homes because there isn’t much competition in our market for them. Let me clarify; it’s not that our market lacks competition overall. What I mean is that when it comes to spec homes built by most of our builders here in Oklahoma, it’s typically a first-come, first-served basis. There are no bidding wars for these spec homes. It’s interesting to note that most builders don’t inflate prices on their homes, despite the opportunity to do so. It truly is a first-come, first-served scenario for those putting in contracts on these spec homes. If you prefer to avoid competing and want a new home, a spec home might be the right choice for you.
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Over the course of my career, I’ve heard rumors from buyers that spec homes lack high-end finishes. Let me assure you that this is definitely not true. There are different levels of home builds, no doubt about it. Since the end of the 2008 recession, home builders have been incorporating mid-range to high-end finishes into their spec homes to attract buyers. Your spec home won’t have the cheapest possible materials, such as low-quality carpet, inexpensive light fixtures, or subpar paint. It generally aligns with the quality of finishes found in custom-built homes. In fact, we have some builders in Oklahoma who exclusively construct spec homes and don’t offer custom builds. Keep that in mind as you explore your options.
When considering a spec home, you’ll often have the opportunity to visit several homes built by the same builder. This allows you to see their work and determine which floor plan suits you best. Sometimes, you may need to wait a bit for the perfect floor plan, but other times it might be available within a couple of months or immediately. It depends on the situation. If you’re interested in buying a spec home that isn’t completed yet, which is quite common in our market, there’s something you should know.
If the builder has already ordered all the necessary materials, including paint, flooring, fixtures, and even the garage door, it’s unlikely they’ll allow you to make changes to the house, even though it’s not yet finished. This is due to supply chain issues. However, some smaller builders who don’t produce hundreds of houses a year might be more flexible and allow specific changes if the materials haven’t been ordered. However, the builder will likely require you to choose from their own designated providers or select from their existing warehouse inventory. This approach ensures consistency and takes advantage of the builder’s preferred pricing. Keep in mind that you won’t have the freedom to choose from an extensive range of websites or stores. Usually, you’ll be limited to a single selection if the builder allows any customization at all.
Let’s talk about a realtor…
So, should you use a realtor to buy a spec home? Well, obviously, I’m a realtor, and my answer is yes, absolutely, you should use a realtor to buy a spec home. Typically, a builder will either have their own realtor or a sales team. If they have their own realtor, that person is solely licensed. However, it’s advisable not to use them. Instead, you need someone in your corner, someone who works specifically for you and not for the builder. Your realtor can explain different aspects of the contract, as each builder usually has their own unique contract.
In Oklahoma, we do have a standard new build contract, but most builders prefer to use their own contracts drafted by their attorneys. It’s important to inform both the builder and, especially, your realtor if you’re considering purchasing a spec home or a home from a builder. Your realtor needs to be involved from the very beginning, especially if they have already assisted you in the process. They can understand the builder’s process and may have a good rapport with the builder. As a realtor, I personally know many builders in my area, making it easy for me to gather information about the homes they’re constructing. By involving your realtor, you can save yourself the trouble and let us handle that for you.
Your realtor will be an invaluable asset in understanding contracts, keeping track of timelines, and advocating for your interests. They can explain the spec home builder’s warranties and assist you with various aspects of the home-buying process. Now, some argue against using a realtor when purchasing a spec home, claiming that the builder will offer a discount if they’re not involved. While some builders may make that offer, in an aggressive seller’s market, they often keep the money that would have been allocated for your buyer’s agent as profit. Therefore, it’s highly likely that the builder will cover the cost of your realtor, so you might as well take advantage of that benefit.
Now, one of the main reasons people choose to buy a spec home instead of building a custom home is the need for immediate availability. In our current market, it’s possible that your spec home may not be available for another six or seven months. This delay is due to supply chain issues, as many houses are being constructed at the moment. Therefore, be aware that getting a spec home within the next month or so might not be feasible. Of course, people opt for spec homes because they don’t want to be involved in the custom building process or deal with the design choices. It’s understandable that designing a house and making all the decisions can be overwhelming. Even when I built a semi-custom home with a large builder here in Norman, Oklahoma, I found it challenging to make even the smaller choices. So, I completely understand your preference for buying a spec home that a designer has already crafted rather than going through the entire selection process yourself. Don’t worry; it makes perfect sense to me.
If you’re thinking about purchasing a new house or maybe even wanting to build, you might want to watch this video or maybe this video if you’re looking for land.
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