DECIDING TO BUILD A SPEC HOME

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Ray Venema of Susquehanna Builders Inc., has built several spec homes in Lycoming County. I heard from a lot of people that they would be interested in building a new home, but they couldn’t find available land. I decided to build a portfolio of land to make that part of the job easier for them. Then I studied the lots and plan to put spec houses on two of them, said Venema.

Factors you should consider when building a spec home include:

Demographic make-up of the community - determine the average age group and income level of the people living in the neighborhood.
Existing homes - research the average cost of the homes in the community.
Target market - based on the above factors determine who is the targeted purchaser.
Amenities - based on the target market determine what amenities the purchaser wants to see in the home by researching other home communities built for that audience
Budget - determine borrowing needs and level of interest reserve needed for the project.

Not adhering to these factors can produce some risks. Builders should be careful not to build a home that is priced higher than those in the neighborhood. At the same time, it needs to offer the amenities your target buyers are looking for, said Venema. In his case, he is targeting the empty-nester market. His homes will have first floor master bedrooms, wider doorways and offer low maintenance features.

Building a spec home does offer several advantages. In contrast to a custom home where the client is involved throughout the process, you will make all the decisions on the spec home. Scheduling can be more flexible to take advantage of times when your crew or subs are idle and production, with a mix of custom and spec homes, can be more stable.

Having a spec home for perspective buyers to see can be a benefit. It can function as a model home exposing you to a larger client base and gives prospects an opportunity to see the quality of your work. Many people are afraid or not interested in the custom building process, but still want a new home. Having a spec house in your inventory gives you the opportunity to
reach this buyer.

by Ray Venema -

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Source: -article supplied by PBA


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