A spec home is one that a builder constructs without already having a buyer. He builds it on speculation. Spec homes are a good choice for buyers who don't want to have input at each point of construction and who want to be able to move into the home quickly.
Successful spec homebuilders are typically selective concerning the neighborhood in which they build. They are aware of the amenities that allow the home to bring a premium price while reducing the time between the completion of construction and the buyer move-in date. Builders who make poor decisions often have spec homes that remain on the market too long, requiring them to discount the price.
The advantage of a spec home to the buyer is the ability to see exactly what he is purchasing. However, because the home is the builder's idea, upscale features that add to the cost of the home are sometimes not important to the buyer. Depending on when the buyer places the home under contract, he may lose the ability to choose paint colors, flooring and other features that make the home his own.
Spec homes are generally more upscale than tract homes. Tract homes all have similar floor plans. They are less expensive to build because all the homes in the subdivision use similar materials.