Spec home or to-be-built:
which one are you looking at?

Walk into a new community in South Jersey on a Saturday and you can see both kinds of house at once. One is framed and roofed with nobody's name on it. Another is a flat lot with a stake in the ground. The first is a spec home. The second is to-be-built. Which one you buy changes how much you get to pick and how soon you move in.

A spec home is a house a builder puts up on speculation, before anyone has bought it. The builder chooses the plan, the lot and the finishes, and carries the cost while it goes up. As it nears completion it usually gets marketed as a quick delivery home, because most of the building is behind it. The appeal is timing and certainty: the kitchen you are standing in is the kitchen you are buying.

A to-be-built house runs the other way. Nothing is built yet, so the choices are yours, and they come with a deadline. Most builders here attach the New Jersey REALTORS® Addendum for New Construction to the contract, and it gives the buyer seven calendar days from receiving a fully signed copy of that addendum to make the standard color and finish choices. The choices are not open ended either. They come from what the addendum lists, what is on the builder's selection sheet, or what the builder has on display in the model home.

The same addendum sets out a few things buyers are often surprised by. The builder decides where the house sits on the lot, and may reverse the floor plan. The builder may swap in materials, equipment or design of equal or better quality. The form also says the finished house can differ from the brochures, the plans or the model home, because of what the crew finds on the site, the shape of the ground, or what materials are available. Model homes tend to carry options and extras that are not in the base price, and the addendum says the builder marks those in the sample. Either way, the builder covers the construction under New Jersey's New Home Warranty and Builders' Registration Act, and the addendum says the buyer does not have to close before the certificate of occupancy is issued.

Before you decide, it helps to know when you need to be out of your current place, which colors and finishes you would actually miss, and what the builder already chose on the spec home in front of you. Your agent can walk both sides of a community with you and lay the two out against your timeline. Loan terms, and what a rate looks like on a house that closes next spring instead of next month, are questions for your lender. What any clause in your own addendum means for you is a question for a licensed New Jersey attorney.