The key difference in Custom versus Spec is the amount of buyer involvement.
Spec homes have the least buyer involvement. These are houses that a builder chooses the lot, plan, and interior finishes. Spec homes are often placed under contract prior to completion leaving a buyer with a few personal-choice options to fill.
True Custom homes have the most buyer involvement. The buyer and their builder work closely to fine tune the details of every aspect of the build. Most custom builds are done on a cost-plus contract. This allows the buyer to set their own budgets for the home and splurge where they want to splurge. Although the buyer is more in control than any other scenario, it is important to note that builders will still expect buyers to choose products from manufacturers and suppliers that the builder trusts the quality and craftsmanship.
Semi-Custom builds often start as spec homes and a buyer comes along very early in the process allowing them to choose many, if not all of the finishes from a set of builder's standard options. This option is a happy medium that gives the buyer a personalized home within a set purchase price.