Saving Cost on Specs


That is the 100k dollar question.  Literally.  I have seen numerous examples of both sides of this equation.  Your goal in building a home to sell or a speculative home is to balance low cost with high quality.

Negotiate with the Suppliers

When I say ‘Negotiate’, I do not mean barter.  There is little sense in doing this and it is often frustrating and sometimes downright embarrassing.  What you need to do is set the stage with the suppliers to get the best price possible.  When you visit a supplier, bring your house plans with you.  They will think that you are 1). Building your own home; 2). Working with a builder; 3) You are a builder.

Let the supplier know that there will be multiple projects and houses.  Use phrases such as “on this home I intend to….but on the next one we are looking at something different”…….Suppliers love to build relationships with builders and they are willing to reduce significantly if they can sense that there will be future work.

Take this example: My wife went to the ‘Low Cost Flooring’ store and inquired about their hardwoods/engineered woods.  She was quoted a price and left the store to go to a different store.  At the next store she pulled out her Home Plans and started talking about our spec homes and how we are getting into building.  She was Quoted a Price 1/2 off the first store price. 

Amen.  It works.  I will freely admit that my wife is better at negotiating the best price than I am.  I sometimes follow along to watch.

The Parade Spec Home Builder

There is a builder that I am very familiar with that builds spec homes.  But he builds HIGH END parade type spec homes.  These are the TOP of the line with the most expensive subs and the most expensive finishes, appliances, architecture, design, etc.  For him it works most of the time.  He has created a name as a High End home builder and because of that he has gotten into more Custom homes now.  The problem with this approach is that your homes are limited in the market that they attract.  They scream LUXURY over VALUE. 

The Cheap Spec Home Builder

There is more than one builder around here that builds CHEAP homes that look like garbage.  They generally sell.  My guess is the markup is low, but the volume is high.  This is also a game plan that works for some builders.  I have seen builders lose money fast on these homes though once their reputation catches up with them and they can no longer sell specs with their name on it.


Stucco vs Siding

This is a conversation that my wife and I had many times.  We like the look of stucco, but we hate the extra cost.  On a house the size of our first spec (4600 sq feet) you will lose up to 30k dollars with stucco.


Our answer to the stucco question was no, we did not think that stucco added more than 30k in value to our home, especially considering the housing market and economic climate.

We decided to go with partial siding/partial fiber cement siding, partial stucco trim and partial rock.  The combination saved about 25K in building costs and it looks great!


Picking the right flooring is a huge key to the success of any spec home.  You can go with Hardwood and large trim everywhere and really spend a lot of money.  We researched the issue for a long time. We decided on engineered wood, large trim in the downstairs great room and main living areas, Tile for the kitchen.  We were tempted but in the end did not use vinyl.

Tile flooring in the kitchen is an option.  It is a little more expensive to install than hardwood floors and a lot more expensive than snap together engineered wood.  Tough Choices.

Three Car Garage

We have a three car garage.  Instead of having them all separate, we combined two into one to save cost on the mechanical door/appliances.

Mud Room in Laundry Room

Initially, our mud room was separated from our laundry room.  Our builder said to save cost, we should put our mud room with our laundry room and instead of built in cabinets we should use lockers/benches with hooks.  We agreed.

Transom Windows

One upgrade that my wife didn’t want to live without.  It brings in sun.  I agreed so we stayed with the added cost of transom windows.  We only included transom windows in high visibility areas.  We added grading to those highly visible windows also.


We wanted a half circle driveway that led to the front door of our home.  It would cost 10k more.  We went without it.  Still undecided on whether we made the right decision there.


From the beginning of the spec home project, all that I asked for was a second story balcony.  That is it.  Our home was built at the top of a hill and there were homes in front of us that would be built soon.  I wanted to preserve the view, which was very nice.  I am also a sit and ponder type guy.  So, I asked myself, is the desire for a balcony a selfish one or will it add to the value of the home?  I couldn’t come up with the answer.  The builder said scrap it.  My wife said scrap it.  We kept it. It added at least 7k to the cost.

You don’t need great balcony flooring.  Just a basic outdoor carpet over the woodboards.


Stainless Steel Appliances

You can’t skimp on stainless steel appliances.  Seriously, I don’t think you can.  You watch the Home TV shows.  The three things they say are ‘Ooh granite, ooh stainless steel appliances, ooh how open.’  I would love to save on this area, but you just can’t.  Instead you have to shop deals.  We bought our stainless steel appliances 2 months before I home was even started at the SEARS twice a year appliance sale.  It is a real sale, not a FAKE and I am not a spokesperson and I do not get paid by Sears to say this.  Believe me, I tried to talk my wife into buying refurbished appliances on eBay.


This is a tough one.  You won’t have much left in your budget for landscaping.  BUT, you can’t just expect to sell your spec home when all you have is dirt.  We budgeted 7k for landscaping.  It was a bare bones job.  We used the Hydro Seeding (the green spray grass) instead of sod and we did a very minimalist landscaping job.  I have learned that landscaping issues are not a huge deal when someone buys a home. I think some people can vision what they want done and they don’t expect a whole lot when it comes to landscaping a new home.

Fence Around the property

Heck no.  Not even close.  There is no way you can afford to fence the property and sell the spec home.  We tried to fit it in the budget.  Couldn’t find the value here.

Vinyl Flooring?

Depends on your spec home market.  It really cheapens it.  Hate to say it.  I wouldn’t use it and I am cheap.

Granite, Quartz or Marble Tabletop?

Love the look of marble. Love the look of quartz even more. It is a little more expensive though.  Your average consumer loves granite.  It is tried and tested and it looks great.  We went with granite in the Kitchen and Quartz in the Bathrooms.


We visited a friends home that was recently built (actually it’s not done yet).  They plan on selling it soon.  It has been over 1 year and 2 months since they began construction.  Everything that they could do on their own, they have done.  They have spent nights, weekends and vacations to work on their house.  They have saved considerable money with sweat equity.  Do I think this is a good practice for spec homes?

No.  I definitely commend my friends on what they have done and think it is great for them.  They have saved money and built a large home, A home that they couldn’t have afforded otherwise.  However, it is not a sustainable plan.  You can’t spend that much effort, time, work with one home at a time.  It just can’t be sustained.  It may work for one home every 5 years, but if you want to get into the business of building spec homes, that much sweat equity will not work.

Also, when dealing with a construction loan, it is difficult to find financing on a project for longer than six months without beginning interest payments.  This means that before the home can be occupied you will need to start paying on the loan.  Not a great thing. MORE INFORMATION ON CONSTRUCTION LOANS

Swing Sets, Basketball Hoops, Staging, etc.

When selling a spec home, you generally have to be a minimalist.  Basketball Hoops may look good in the back yard, but the cost will likely not be recovered.  Prospective home buyers are not afraid to see that some work needs to be done, including putting up a fence, enhancing the landscaping, etc., as long as the home is move in ready quality, there is no need to add in everything to your spec home.

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