Spec Home vs Custom Home: Key Differences to Understand

If you’re thinking of buying a new construction home, you’ve likely heard the terms “spec home” and “custom home.” These two homes are different types of new construction, but there are some key differences between the two.  

Before you build a home or make a purchase, it’s important to understand how spec homes and custom homes differ so that you can make the best choice for your family and your budget.

In this post, I’ll go through the key differences between spec homes vs custom homes and cover the pros and cons of each to help you make an informed decision.

Spec Homes: A Definition

Spec homes are built by a construction company or contractor. The contractor builds a spec home before there is a buyer in place.

They choose a plan they think will sell well in the area and have a budget for materials. Contractors approach spec homes with a balance of putting in amenities that the buyers in an area want or expect while also maximizing their profits. 

Since the contractor doesn’t know who’ll buy the home, there are often few customizations in the house. They keep everything basic and neutral to appeal to a wider variety of buyers.

Spec homes are move-in ready. You may buy a home that’s already finished or come in somewhere during the construction process. However, once the house is finished, you won’t have to do anything before moving in.

Custom Homes: A Definition

When you build a custom home, the homebuyer often goes to a builder with a plan they’ve chosen or had an architect draw up for them. They typically have a clear idea of what they want the home to look like and the type of materials they’d like to use. 

When building a custom home, the homebuyer usually has control over all of the major decisions. They choose which materials will be used on the inside and outside. Instead of choosing from a selection of materials chosen by the builder, they choose their own materials and set the budget.

A custom home allows you to get the exact home you want. You can choose all of the elements to fit your own tastes. You can also make structural decisions, such as adding or removing rooms or making certain areas larger or smaller.

Spec Home vs Custom Home: Which Costs More?

When comparing houses of similar sizes, spec homes are almost always more expensive than custom homes in the long run. With spec homes, contractors stick to a list of materials that are within a budget.

They can usually tell you how much the house will cost, so you can get an idea of your budget. Spec homes may be more expensive in the long run if you plan to remodel to fit your needs.

Custom homes are almost always more expensive from the start, especially if you’re hiring a general contractor to manage the build. Contractors tend to cost more for a custom home because it’s more work for them than their usual spec homes.

Also, if you have an intricate, detailed house plan, it can cost much more to build than a basic plan!

Materials can cost you more as well, especially for things like floors, cabinets, countertops, and fixtures. You can save money here if you shop wisely, but you can also go overboard if there are certain things you want.

Even something as simple as choosing a different paint color for each room can cost more!

Which One Takes Longer?

A custom home takes a lot longer to finish than a spec home!

In most cases, you’ll find a spec home while it’s somewhere in the construction process or even finished. You typically won’t have to wait longer than a few months at most. 

Custom homes can take anywhere from a few months to up to a year or more, depending on how everything goes. If you don’t already own your land, then you’ll need to find and purchase land. Then you’ll need permits, which can take some time depending on where you live. 

Even once the ball is rolling on construction, you’ll often run into issues that can hold you up. If your home has a lot of unique details or if you’re ordering special materials, it’s easy for things to take longer than normal. However, if your custom home is fairly basic, the build shouldn’t take longer than a spec home. 

Resell Considerations

If you’re building your dream home, you may have no plans to resell. Still, you should remember that life circumstances can change and you may be in a position where you need to sell.

If you’re planning on selling your house eventually (which most of us are), then a spec home may be the more generally appealing home for resale. It all depends on factors such as the home’s location and finishes, more so then whether it was a spec or custom home.

While you may have been quick to assume that custom homes always sell for more, this isn’t always the case. Some families end up building homes that are so specific and custom to them that their potential buyer pool is smaller.

That being said – if it’s more of a luxury house and you live in an area where people are searching for luxury homes, you may wind up making good returns when you sell.

Being different certainly can be better when it’s done tastefully and with resale in mind when it comes to custom homes.

Design Choices

Custom homes give you complete creative control over your home. You choose everything from where you build to the floor plan to the materials you use. You can make your house exactly what you want.

With a spec home, the builder chooses everything. They typically use neutral, basic materials to appeal to more people. The floor plans are usually standard and have few embellishments. The builder is trying to be as economical as possible to make a profit.

Pros and Cons of Spec Homes

Weighing out the pros and cons of a spec home can help you decide if it’s the right choice for you.

Pros

  • More affordable
  • Move-in ready
  • Can move in within a few months
  • Usually easy to resell

Cons

  • Few unique features
  • Basic materials and fixtures in neutral colors
  • Little to no control over how the house is built
  • May not be in a location you like
  • It May require upgrades to make it what you want

Pros and Cons of Custom Homes

There are both advantages and disadvantages to a custom home. This list can help you decide if you prefer a custom home.

Pros

  • Can get the exact home you want
  • Lots of control
  • You choose all materials and fixtures 
  • You choose the location and size of the lot

Cons

  • More expensive 
  • May not get as much return on your investment

Which Type of Build Is Right for You?

When it comes to spec home vs custom home, one type of house isn’t necessarily better than the other. The best house will be the one that fits your family’s needs and suits your current and future situations. 

If you’re younger or on a budget, you may want to go with a spec home. Sometimes it’s good to live in a couple of homes before you build your forever home, as you’ll get an idea of what you like and don’t like before committing to a more expensive house.

If you’re ready to move into your dream home and plan to stay there a long time or even forever, it may be time for a custom home. A custom home is a good option if you know exactly what you want in a house and you don’t mind waiting a little longer to get into a home. You should also choose a custom home when you have the budget to take on any extras that may come up. 

Is There a Happy Medium?

If you’re stuck between choosing a custom or spec home, there is a happy medium. Many contractors build in neighborhoods where they already own land. They have several sets of house plans they use and you can choose the one you like best. 

As the house is being built, you can choose the materials, fixtures, and paint colors to suit your tastes. You’ll usually have a limited range of choices so that the builder can stay within budget. You won’t be able to customize as much as you would with a custom home, but you at least have some choice.

These homes are usually more affordable than a custom home and can be finished more quickly. Your choices will also make the home feel more like your own.

Final Thoughts

When it comes to a spec home vs custom home, both types of houses have their merits. A spec home is great for those looking for a starter home or people who are on a budget. You can get many of the benefits of a new home without having to break the bank.

If you’re ready to move into your forever home, then you may want to consider a custom home. Custom homes are also great for people with specific tastes or families with unique situations. These homes can be tailored to your situation and allow you to have a more comfortable living experience. 

No matter which type of home you choose, you’ll be getting a new house with a lot of potential. 

Related Articles