Six Rules to Build a “Spec” House, Pacific Palisades – New Construction

By: Otis Bradley

Pacific_Palisades_New_Construction

Project: Pacific Palisades, California – New Custom Home

Architecture: Elizabeth Stevenson
Builder: Otis Bradley Company, Inc.
Interior Design: Otis Bradley Company, Inc.

 

This home was designed and built to sell. A new home, built with the intention to sell can also be referred to as a “Spec” house.

Six rules to effectively design and build a “Spec” house:

  1. A good budget
  2. Efficient construction schedule
  3. Organized purchasing
  4. Efficient and timely decision making
  5. A good real estate market
  6. Good design for resale

This is a great way for a builder to round out their business – particularly if the house can sell for more than it costs to build i.e. a reasonable profit. Over the last years 2008 – 2012 during the real estate depression and mortgage collapse this concept has been wiped out.

A spec house if done well is a great lesson for all who want to build.  A good project balances a beautiful home that appeals to the local audience at a price that is salable for more than it costs to build.

1997 Rough Numbers

Purchase Price: $600,000

Construction: $500,000

Sale: $1,400,000

Today

Purchase Price:  $1,500,000

Construction $1m

Sale: $2,300,000

Obviously the cost to build is more than the sale price in the above example.  As the market comes back, hopefully this will change.

 

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Otis Bradley Company, Inc. Feel free to copy, share or re post this article. Kindly make sure to include this information: Written by Otis Bradley, a Custom Home Builder, in Southern California. Please see OtisBradley.com for more information on Custom Home Building!