Buying a new construction home feels different from buying a resale property from the start. You're walking through model homes, picking colors and finishes, and dealing with a builder's sales team rather than a homeowner. At some point in that process, a contract appears. And this is where things get important.
Builder contracts are not the standard real estate purchase contracts used in resale transactions. They are written by the builder's attorneys, and they are designed to protect the builder. That doesn't make them predatory — it makes them documents you need to read carefully and understand completely before you sign anything.
The Builder's Contract Protects the Builder
Start with that premise and work through the specific ways it manifests.
Timelines are almost always favorable to the builder. Most new construction contracts give the builder wide latitude on the completion date — often with provisions that allow 30, 60, or 90 day extensions without penalty, sometimes more. If you've given notice on a rental or if you're in a transaction chain where you're selling a home to fund this purchase, those delays can create real problems. The contract typically does not obligate the builder to compensate you for your carrying costs if they're late.
Price changes on upgrades: The base price on a new construction home often looks more accessible than the finished price of the home you'll actually want. Upgrades to flooring, countertops, cabinetry, lighting, and other features are added on top, and those upgrade selections go through a design center with the builder's margin built in. Understanding the total cost of the home you're actually building before you're emotionally committed to the process matters.
Earnest money terms in builder contracts are often less flexible than in resale transactions. Some builders require earnest money to be non-refundable after a certain point, or have specific conditions under which it's returned. Know what you're committing to.
Lot premiums are separate from the base price and can be significant. A corner lot, a lot backing to open space, or a lot with a view can add tens of thousands of dollars to the price. These are negotiable to varying degrees but rarely discussed as prominently as the base price.
What's Often Missing
Builder contracts frequently don't include appraisal contingencies, or include them in modified form. If you're financing the purchase and the home appraises below the contract price, the builder's standard contract may put you on the hook for the gap rather than allowing you to exit.
Inspection contingencies in new construction are handled differently than in resale. New construction is not exempt from problems — framing issues, improper installations, and construction defects happen in new homes too. A pre-drywall inspection by a third-party inspector before the walls are closed is one of the most valuable steps a new construction buyer can take. Whether the builder's contract allows this, and how they respond to identified issues, is worth clarifying before you sign.
Builder warranties are provided in lieu of seller disclosures. Most Utah builders offer one-year workmanship warranties and longer structural warranties. Understand exactly what's covered, what the process is for making a warranty claim, and what's excluded.
The Role of Your Own Agent
Builders encourage buyers to come in without their own agent, and some offer small incentives for doing so. What they're actually doing is reducing the number of people at the table who are advocating for the buyer's interests. Having your own buyer's agent in a new construction transaction costs the buyer nothing — the commission comes from the builder — and gives you someone whose job is to ask the questions you don't know to ask and review the contract terms with your interests in mind.
If you're already working with an agent, register with them before you make your first visit to the builder's sales office. Once you've visited independently, some builders will not allow you to add an agent to the transaction.
Things That Are Negotiable
New construction contracts have a reputation for being take-it-or-leave-it, and some builders do hold firm on most terms. But several things are often negotiable, particularly when a builder has excess inventory or is motivated to sell a specific home:
Closing cost contributions from the builder, which are often more negotiable than the base price. Builders who want to protect their pricing for comparables will sometimes give credits toward closing costs or upgrades more readily than they'll reduce the sticker price.
Upgrade packages or design center credits, particularly on spec homes (homes the builder has already completed or nearly completed).
Rate buydowns: Many builders have affiliated lenders and offer rate buydown incentives. These can be genuinely valuable but should be compared to the market rate and your loan options independently.
A Practical Checklist
Before signing any new construction contract, know the answers to these questions: What is the estimated completion date and what extensions does the builder have the right to take? What are the earnest money terms and under what circumstances is it refunded? What does the upgrade cost look like for the finishes you actually want, not the base finishes in the model? What warranty is provided and what's the process for a warranty claim? Does the contract have an appraisal contingency?
A detailed look at how to read a Utah new construction contract covers some of these in more depth. If you're considering new construction and want someone to walk through a specific contract with you before you sign, reach out. This is an area where having an experienced eye on the document makes a real difference.
