Spec Homes

According to a recent study conducted by the National Home Builders Association, more than 80% of new home buyers start the home buying process on the Internet.

It seems that those statistics have yet to reach the advertising and marketing departments for a majority of the home building industry. See also, Home Builders Are You Blogging?

One Texas home builder however, seems to be getting the message loud and clear.

Tilson Homes has been building quality new homes on Texas land for over 75 years, and a quick peak at their website might foretell why many more prospective clients will consider them to build their new house in the future.

Here are the top six characteristics on how this home builder website effectively delivers the information that Internet prospects want; and how you can implement similar strategies with your online advertising:

1.  The main objective for most house hunters searching the Internet is to gather information that will help them make an informed buying decision.

An online sales counselor should be available 7 days a week during normal business hours to help answer prospective questions that are not covered in your online marketing literature.

2.  Customer interactivity does not have to be flashy to be an effective Internet advertising tool on home builders websites.

The ability to create a user account to store home search information will foster repeat visits to your website, and begins to incorporate a sense of customer attentiveness to your prospect's personal needs and wants.

3.  It is suggested to formulate multiple access points for the main content of your website. Web marketing studies show that different web users respond to different visual stimuli.

Balancing graphic links with keyword rich text links can increase your website browsers ability to effectively navigate your floor plans and home offerings easier.

4.  A common complaint for many home builder websites is that there is not enough information regarding specific product and floor plan offerings.

Stop all heavy handed advertising techniques that impede a home buyers ability to gather information! Give them what they are coming to your website for new home information.

5.  Provide live pictures that actually demonstrate the product that you are offering to build.

A home builder only has to build a floor plan for client, to be able to re-use those images to sell to another. Most home buyers don't want to imagine their future home, they want to see it.

6.  In case your website design team missed the mark on providing access to the easy to find information that your web clients are looking for...

Create a simple keyword rich, text-based site map navigation page that allows browsers un-tethered access to everything that your home building website offers.

This is the information age. Gone are the days of home builders and real estate professionals being the only segment of the population to posses knowledge regarding new housing and construction.

Just as the home building industry has implemented new technology, and techniques to speed up the construction process itself, the online home buyer has also discovered the power and freedom that well designed web technology brings.

Builders who take initiative with these simple, yet effective website marketing strategies will reap the rewards that transcend their core construction services, they will be sewing the seeds of future new home sales.

The LA Times Hot Property column reports that real estate mogul Mohamed Hadid's latest Beverly Hills offering has had a price drop from $16.5 million to $12.9 million.

The 12,000-square-foot spec home located near Beverly Hills, California at 1446 Donhill Drive has a Balinese design with bamboo, exotic Asian woods and other materials imported from around the world.

This is opulence on a grand scale with heavy doors, floor-to-ceiling glass windows, and three separate master suites among the six bedrooms.

There is a Balinese-styled home theater, wine cellar and a gorgeous infinity pool with unobstructed views.

All of the furnishings are included in the price of this lavish spec house. 

Preview short VIDEO tour.

Have you read the headlines surrounding the demolition of 16 never lived in, new homes near Victorville, California?

Patrick Thatcher, staff writer for the Daily Press first posted this VIDEO on Youtube.

Guaranty Bank says knocking the homes down is cheaper than finishing them, making some wonder if it could happen here.

The Texas-based bank has decided to have the spec homes destroyed in the desert community because the estimated $1 million cost to complete them was more than it could make selling them.

Four of the luxury homes, priced in the $280,000-350,000 range, were already finished, and the others were in various stages of completion. The estimated cost of the demolition was over $100,000.

"It's incredibly unusual I've not heard of it all in Texas I've seen that maybe once or twice in my whole life," said Harry Savio of the Austin Home Builders Association.

Speculative builders are subject to real estate excise tax on the selling price of the land along with all attachments including buildings, roads, and other structures. The sale of real estate is not subject to the B&O tax or retail sales tax.  

A speculative builder is the consumer of all material incorporated into the real estate. A speculative builder may not use a resale certificate to purchase materials used in speculative building. Any construction contractor hired by a speculative builder is a custom prime contractor for tax purposes and not a subcontractor. Hence, any contractor performing construction services for a speculative builder must charge sales tax on the total contract price. 

When a speculative builder sells or contracts to sell property upon which there is a building under construction, all construction completed subsequent to the date of such sale or contract constitutes custom prime contracting.

The "retail sale" does not take place until the purchasers have the "right of possession" to the real property being constructed. Typically, the right to possession is transferred on the date of closing the property conveyance. Therefore, retail construction on what was originally a speculative house does not occur until after closing.

When you build a spec home you are creating an asset that will be sold to another person. Spec homes are built in anticipation of a sale; therefore, a construction contract does not exist. You do not use the rules for home construction contracts, which are contracts to build a home with four or fewer residential units.

When you build a spec home all the direct and indirect costs are accumulated. These costs are called the basis of the property and cannot be deducted until the home is sold. The costs that must be included in the basis of the home are:

• Land
• Materials
• Labor, and
• Allocated indirect costs (See table of indirect costs)

Thus, the income is reported and the basis deducted in the year the home is sold.