Good Deals on Spec

In recent months, buyers have gained the advantage in the local real estate market.  This is especially true in the market for “spec” housing – homes builders have put together for quick resale.  Spec housing has lots of inherent advantage: they’re brand new, no left-over pet odor from previous owners, and these days many come with options to add your own last-minute custom touches.  On the downside, spec houses differ from custom new homes in that they often utilize “cheaper” materials – granite tile as opposed to slab, or other finishes you might be able to find at your local Home Depot. 

Still, there may be huge opportunities for buyers to purchase spec housing right now on the cheap.  Remember, spec houses are empty – and oftentimes builders owe money on the project until they can close a sale.  Spec builders don’t often have the luxury of resting on their laurels until some unsuspecting buyer agrees to ridiculous asking prices – and they are certainly more savvy and realistic sellers than your next door neighbor who is still crossing his fingers that a dimwitted buyer will still come in and sweep up his property for 2006 prices.

When searching for a good deal on spec, you only need to look at two numbers:  (1) the margin (difference between the selling price and the original purchase price) and (2) number of days on the MLS.  Assuming most spec builders can throw a home together for under $250 per square foot, the mark up on many of these homes is huge.  This equates to a potentially large swing in the actual sale price of the home – which is where days on MLS comes in: the longer the house has been sitting on the market, the longer the builder has been carrying this home on his books, and the more eager the builder will be to sell. 

Take a look at these possibilities – the low hanging fruit of spec housing, and ready to hear your low-ball offer:

Bellevue / Bridle Trails
3459 140th Ave NE
MLS: 27024945
Asking price: $3,250,000
Original purchase price: $750,000
Days on MLS: 376

Kirkland / Rose Hill
3459 140th Ave NE
MLS: 27024246
Asking price: $749,900
Original purchase price: $231,750
Days on MLS: 377

Bellevue / West Bellevue
10228 NE 20th Pl
MLS: 27083164
Asking price: $1,890,000
Original purchase price: $649,950
Days on MLS: 289

Seattle / Magnolia
2376 West Howe St
MLS: 27144600
Asking price: $2,354,000
Original purchase price: $595,000
Days on MLS: 202