Definition of "Spec house"

Marc Cardullo real estate agent
Marc Cardullo Coldwell Banker Residential Brokerage - Cape Elizabeth

Are you speculating what is a spec house?

(sorry for the lousy pun)

The textbook spec house definition is of “one built on a speculative basis, without an order on the books”.

Here’s the idea behind spec houses: normally, the future homeowner hires a building company/contractors to build their home exactly like they envision, right? Spec houses are not that customized. The way its conception and building is done is reversed - a building company/contractors will build the home with their own funds instead of paid by a future homeowner. Once the home is done – or anytime in between starting and ending construction – they sell it to potential homeowners.

Why is this interesting for building companies? It’s a bigger investment that can pay off better than just the construction. Sometimes contractors and building companies make a deal with big real estate developers to take a cut out of their service in return for a piece of land. Instead of just selling the land to someone else, they can build a spec house on it and profit more.

Why is it interesting for homeowners? You have a brand new home without the hassle of going through construction. The problem with a spec house is that it might not be built to your specific needs. But sometimes, even though it wasn’t built for you specifically, it meets everything you need and it becomes a great opportunity. It’s usually brand new and with the latest real estate decor trends.

Real Estate Advice:

Have a local real estate agent by your side when going about spec houses. Some constructors might suggest going without one as a way to lower the price for you – taking the real estate commission out of the way – but there are several negotiation aspects that will escape you if you don’t have professional and experienced help.

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