If you're in the market for a new home, should you choose a spec house or a custom build? Ultimately, that decision will come down to the time, money, and effort you want to put into your new residence.
"Each path offers benefits, yet the right fit often depends on how much personalization you want — and how much time you’re willing to invest before moving in," wrote Florida home-building expert Paul H. Schaefer II of Sage Homes LLC in HelloNation earlier this month.
What Are Spec Homes?
A spec home is one built speculatively by a developer. The developer normally buys a tract of land and builds multiple new homes on it, hoping to turn a profit on the investment. But occasionally, a single home on a single lot is built speculatively, especially in hot housing markets.
Once a spec home is completed, buyers typically get what they're given, though sometimes a developer might agree to make minor changes. However, purchasers who buy before a home is completed are often given choices on finishes and even layouts, providing a limited level of customization.
How extensive their options are tends to depend on the stage of construction the home has reached and the developer's policies and range of finishes. With tract homes, the developer usually relies on economies of scale, so some common elements will be identical among all properties, or at least come from the same supplier.
However, the days of cookie-cutter homes are largely over. Now, developers typically provide a range of designs, so spec neighborhoods aren't comprised entirely of externally identical boxes.
Pros and Cons of Spec Homes
Pros
- Highly predictable costs: The developer should be able to provide a very good idea of the final figure.
- Lower costs: Economies of scale and other factors typically make spec homes less costly than custom builds.
- Possible builders' incentives: In many parts of the country, spec homes are cheaper than existing homes, partly thanks to builder incentives.
- Speed: Many spec homes are move-in ready, and developers typically move at speed to finish unbuilt sold units.
- Hands-off for buyers: Buyers tend to make only limited decisions on unbuilt homes and typically even fewer on finished spec homes.
- Resale value: Developers are experts at delivering homes with wide appeal, helping to keep resale values high.
Cons
- Limited choices: Even if purchasing before construction has begun, buyers tend to have a limited range of layouts and finishes.
- Lower specs: "Features such as upgraded hurricane windows, custom cabinetry, or specialized energy systems might not be included, depending on how the builder designed the home," says Schaefer.
- Cookie-cutter feel: Even with several models of homes on a single tract, the feeling of each being a variation on a theme can persist.
What Are Custom Builds?
With a custom build, the clue is in the name. Buyers find and purchase their ideal lot with the requisite zoning and obtain local government permits, often in consultation with an architect and construction company.
Each buyer gets total control of the build, including design, layouts, finishes and specifications. In other words, the home will be totally customized to meet their family's exact needs and tastes.
Pros and Cons of Custom Builds
Pros
- Infinite choices: The buyer picks the lot, lot orientation, design, layout, finishes, amenities ... literally, everything.
- Uniqueness: Every home is unique, but a custom build can provide a whole new level of uniqueness.
- Control of design: The home can be built to higher specifications (including energy efficiency) than most developers generally adhere to.
Cons
- Typically higher costs: Few who custom build a home can resist expensive finishes and top specs.
- Greater financial risk: If site or other issues reveal themselves during construction, there's nobody to pay for remediation except the buyer.
- Longer timeline: It can sometimes take years to get from concept and plans to moving in.
- Hands-on: The buyer makes all the decisions. Indecisiveness can add to costs and extend the timeline. On-site meetings can feel endless.
- Resale value: Buyers who don't build for a wide pool of potential purchasers can find it hard to sell later. Overcustomizing for one family's needs and tastes can make reselling more difficult.
Bottom Line
Choosing between a spec home or custom build can depend on your goals, construction budget, and timeline.
Generally speaking, you may be better off with a spec home if you want to simplify the process, move in sooner, and limit your overall costs. However, if you prefer a highly personalized space, don't need to move right away, and have a larger or more flexible budget, a custom build could be the right fit for you.
