What does the term 'built on spec' refer to in real estate?

The term 'built on spec' in real estate specifically refers to houses that are constructed without a prior purchase commitment from a buyer. This means that the builder undertakes the project with the hope that a buyer will be found once the house is completed, allowing for flexibility in design and layout based on perceived market preferences rather than specific buyer requests.

This approach can potentially reduce the time and cost involved in the building process, as the builder can use standard designs that are known to appeal to a broad range of buyers. It is a common practice in residential development, particularly in active markets where demand for new homes is high.

In contrast, homes built for specific buyers involve a commitment prior to construction, addressing individual preferences and needs. Rental-only properties would not typically be categorized this way, as they are built with the intent to lease, not sell. Similarly, while government regulations certainly apply to all construction, 'built on spec' does not inherently imply any specific regulatory focus.