MENU

Spec home versus pre-sale: What to know about purchasing new construction

Spec home versus pre-sale: What to know about purchasing new construction

The JAG Team

With so much new construction available across the Triangle, today’s homebuyers have more options than ever to purchase a new, on-trend home. If you haven’t looked at new construction before, it’s an exciting time to buy. But it’s good to know that there are certain terms you may want to understand before you start shopping heavily. For example, you’ll want to know the difference between the terms “spec home” and “pre-sale” to determine how you want to approach your purchase.

If you’re thinking of buying new construction, here’s what you should know as you search for the perfect home.

When new construction is a good option

There are numerous reasons that a brand-new home may be a good fit for you. New construction is designed with the latest trends in mind. Today’s homes are designed with open floor plans, spacious kitchens, and “smart” features that can help you save money on energy costs alone. Some are also designed with specific benefits modern families need, too. They often include options for multigenerational living, home offices, pantries, and more.

In addition, new construction homes are built in up-and-coming neighborhoods and communities. And often, they’re part of new master-planned communities that offer numerous amenities like parks and pools. These homes and locations are built for the way today’s families want to live. This makes new construction undeniably appealing. There are many options throughout the greater Raleigh Durham area that can ensure you get the home, community, and budget you’re looking for.

A row of new homes in a community
New home communities often offer different types of opportunities to buy a new home that best suits your needs.

What is a spec home?

A spec home, which is short for “speculative” home, is a house that a builder constructs on the speculation that it will be highly appealing to buyers. They are typically loaded with amenities and upgrades. And they are designed with the latest trends and features that the market deems on-trend.

Because the features in these homes tend to appeal to a wide range of buyers, these types of homes don’t sit on the market long. They often show buyers what’s possible from a specific builder. That means the moment they’re built, they’re available for purchase. Spec homes are a great way to buy a home that’s filled with the specific trends you’re looking for.

When a spec home might be a good option

If you’re in a situation where you need to purchase fast, a spec home in the Triangle may be a great option for you. Spec homes are on the market and ready to sell, so they’re in turnkey condition and ready for move-in. You are also more likely to have competition for a spec home. You may need to be prepared for that.

It also means you won’t have much — if any — room to customize your home to your wants. There may be some wiggle room to ask for a few upgrades, which you would need your real estate agent to negotiate on your behalf with the builder. If you aren’t worried about customization, however, a spec home may be one of the easiest ways to move into a beautiful new home, and fast.

Sherri Felton, the executive new construction manager for The Jim Allen Group, said it’s good to know how much power spec homes offer buyers. “Generally there is a little more negotiating power for the buyer when they buy a spec home versus a presale since the builder will want to sell the spec home to be able to start another,” she said. “Also, the deposit structure will be different. With a spec home that no changes or upgrades are made, then the deposit will typically be a lot less than a pre-sale home.” 

What is a pre-sale home?

Pre-sales, or pre-construction homes, have a longer timeline than a spec home because they are purchased before or during construction. With pre-sales, you’ll be working with the builder to get the finishes you want. Some builders allow you to fully customize your home, including the right floor plan and home style. You may only get a say in paint color and finishes with others.

There are several benefits to pre-sale homes. One, you sign a contract that details costs and a timeline. This means you’ll know when your home is complete if you need to sell a home in the process. Two, you don’t have to juggle mortgages while your house is under construction. Your mortgage payments don’t begin until the home is complete. And best of all, you won’t have competition if you go the pre-sale route.

In addition, Felton said to understand the deposit for a pre-sale home. “On average, custom builders get a 5% to 10% deposit upfront to start a presale since they are fully customizing it to the buyer’s taste,” she said.

When pre-sale might be a good option

If you want any level of customization and you don’t have a strict timeline, going the pre-sale route might be the best option for you. You’ll have the flexibility to find the right builder, community, and floor plan that meets your needs from the start.

You’ll want to work closely with your real estate agent. They advocate on your behalf and communicate regularly with your builder to make sure everything is staying on track. That way, you can trust you’ll get the home you want, on the timeline and budget you need.

A couple meets with a builder to go over the details of their pre-sale home.
With a pre-sale option, you have greater opportunities for customization before the home is complete.

What to know about model homes

As you’re touring communities with new construction available in them, you may come across a model home that you can visit. Model homes, like spec homes, are designed to showcase floor plans, amenities, and finishes. However, they are used as a sales office while the builder or developer is building within the community. That means there’s constant traffic through the home until the neighborhood or phase is complete.

Upon completion, builders typically sell the model home. A builder may be highly motivated to sell the home quickly to start on a new phase or project. Work with your agent to ensure the home is converted out of sales center and into a home properly.

The choice is up to you

No matter what type of new construction home you decide to purchase, a spec home, pre-sale home, or even purchasing a model-turned-new-home are great options, depending upon your needs. Just be sure to work with an agent you can trust to help the sale go seamlessly.