How much does it cost to build a spec house?
Goodall Homes builds spec houses for first-time buyers and move-up buyers, ranging from 1,500 to 4,000 square feet and priced from $250,000 to $500,000, O’Neal said.
Are spec homes built better?
Spec Homes Offer Immediate Availability Much can be said about the benefits of a home that’s ready when you are. But those who choose to build custom homes or plan-based homes can wait upwards of a year before being able to move in. Spec homes eliminate the lengthy wait so often tied to new construction.
What is a spec home builder?
Spec homebuilders derive their name from the fact that their projects are speculative in nature, meaning they buy land without a buyer speculating that they can later sell the home they build on it. They often purchase a small parcel of land, build one or two homes on it and then put the properties up for sale.
How long do spec homes take to build?
Timetable — The average fix-and-flip takes about 3-4 months before the house is ready to sell. With a spec house, the average timeframe is about a year. In fact, the length of time it takes to build a spec house is one of the biggest risk factors to consider.
How do you get financing to build a spec house?
When you build a spec home, you’ll have to work with a mortgage lender. If you’re a builder building a custom home for a client, that client will get a mortgage loan to pay you while construction is taking place.
How do spec homes make money?
Investors typically make their money on spec homes in one of two ways. They can finance a percentage of the construction costs (lend money to a builder) and earn interest or share in the profits once the home is sold.
Do spec homes come with appliances?
The architectural style, floor plan, features such as bay windows and fireplaces, and even the lighting and appliances are all chosen by the builder.
Why is it called a spec house?
The spec house is a speculative venture for the builder, meaning it was built with the intention of selling it for a profit, as-is or with minimal changes. Spec houses are plentiful when the economy is healthy because builders can sell them quickly and use the profits to build more.
What is the difference between a spec and model home?
Spec Home Builders are built by builders who buy a lot or land, build a house, and then sell the home. A Tract or Production builder generally has model homes that will be the home designs built on these lots. Generally, there is not a lot of opportunity to make changes to these homes.
Are spec homes more expensive?
The cost of a spec home is also typically lower than if you had a similarly-sized custom home built. Much of this has to do with the perceived greater purchasing power of spec home builders, who can opt to pass on their savings to buyers.
What is a spec loan?
A “spec loan” is just an industry term for a loan on a speculative property—one the developer hasn’t already sold. Construction loans are a small part of the total loan market, and speculative loans only represent a fraction of construction loans.