Thursday, April 12, 2007

What is a "Spec Builder"?

I hear the term … What is a spec builder?

A spec builder is a General Contractor that builds a house on speculation. They take the chance that the lot they selected, the floorplan, elevation, colors, appliances, quality, and the many features they elect to include or exclude in their home will appeal to a Buyer. It is a risky and vital part of the construction industry and housing market. Spec builders are entrepreneurs in the truest sense, risk takers that are investing in their own vision and ability.

Spec builders’ homes are often contemporary in their design and accoutrements, pushing the envelope of consumer trends. The features are quite true to the market – a boom market yields higher prices for the spec builder and less is usually offered, i.e.- landscaping, fencing, etc. In a competitive market the individual builder will adjust his product offering to get an edge on the competition.

The tract builder and the spec builder keep one another accountable … to each other, to the market, and to their profession. They keep it real in the industry. Each has a niche market be it affordability, size, location, style, etc. When they begin to cross over, move out of their niche, their success can be impacted. It can be enhanced, or diminished. This keeps them keen.

The spec builder usually builds 1-3 homes a year. Their success hinges on selling the home in a timely manner. They often have hard money constructions loans, high interest rate loans that make them hear cash register bells when their alarm clocks go off in the morning announcing another day of interest. Financial risk is inherent in the industry making spec building not for the faint of heart.

The spec builder provides a variety in the product, and employment in the Valley. They build for all economic levels – some build medium housing, and others ultra custom homes. They are all, however, built on speculation, taking a chance. The many jobs they create in their risky endeavor are essential to the overall financial stability of the Carson Valley today.

Our Advice: The spec builder is an essential component to the real estate market. As the spec builder goes is a good indicator of our market. If you consider changes to affect the real estate market by social, political, or financial means we strongly advise you to look at the resulting impact on the very important spec builder. Their product has character, individuality, and is usually more aesthetically pleasing than rows of look-alike tract homes. Even the Hereford, a Carson Valley historical icon, has uniqueness and individuality from cow to cow.

Let’s keep our houses “spots” varied and interesting – thank and encourage the spec builder for their contribution to our community. Sending them “home” is not a viable option.

When it comes to choosing professionals to assist you with your real estate needs… Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates,, 775-781-5472

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