For many first-time house buyers, the allure of a brand-new home is undeniable. Pristine appliances, brand-new flooring, customizable layouts will have everyone excited, . Buying a new build, however, does differ from buying an older home. It’s an entirely different real estate experience, with its own language, timelines, and trade-offs.
It is important to understand the full landscape of the new build purchasing process. If you are considering buying a new construction home, this is what you should know before you complete the contract.
The Promise of Perfection Versus Reality
New builds are marketed as turnkey properties, which can be true. You may get brand-new/never used stainless-steel appliances, more efficient HVAC systems, and sparklingly clean bathrooms. But that does not mean “new” equals “flawless.
While a new home is very unlikely to have aging plumbing or structural issues, there can still be problems, especially if the build is rushed or is part of a large-scale development. “A lot of new homes are built quickly to meet demand, and sometimes quality control falls through the cracks,” said Kermit Baker, a senior research fellow at Harvard’s Joint Center for Housing Studies.
Case in point, it is common for homeowners to move in and discover cracked grout, uneven flooring, or heating systems that do not circulate evenly. Most of these are covered under the builder’s warranty, which is a key feature of new builds. However, that does not take away the stress and disappointment you experience when you are expecting not to have these problems. Buyers should carefully inspect the home before and after closing and make sure they understand the warranty process, especially in case future issues arise.
Builder Reputation Is Everything
Unlike buying a resale home, where most of the negotiation is between you and the seller (or agent to agent), purchasing a new build brings a third party into the spotlight: the builder. And not all builders are the same.
Researching the builder is a crucial step that many first-time buyers overlook. Check out builders past developments, read reviews, and talk to residents if possible. Some builders are known for excellent construction and stellar customer service, while others are notorious for delays and have minimal follow-through.
“It’s a red flag if you can’t find much about the builder online.” said Gina Helms, a real estate agent in the fast-growing Raleigh-Durham area. “The good ones usually have a track record and happy homeowners who are willing to talk.”
Buyers should also check whether or not the builder is affiliated with any homebuilder associations, like the National Association of Home Builders (NAHB). You can also research whether there are any complaints filed against them with the Better Business Bureau.
Timelines Are More Flexible Than You Think
One of the biggest surprises for first-time buyers of new builds is how unpredictable construction timelines can be. While builders may provide a tentative move-in date, that schedule can shift due to weather delays, labor shortages, supply chain issues, or permit snags.
During the height of the pandemic, some buyers reported delays of six months or more. Even now, with conditions more stable, it is common for closings to be pushed back by several weeks.
This matters if you are coordinating a lease ending, moving from another home, or relocating for work. Experts suggest building flexibility into your timeline and your budget. A short-term rental or storage unit may be necessary if the closing date shifts unexpectedly.
Some builders offer incentives for delays, such as covering temporary housing costs, but not all will do this. Make sure you understand your contract and ask specific questions about what happens if construction is delayed, and if so, push them to provide accommodation.
The Price Is Not Always Final
New builds often come with a standard price that can balloon quickly once upgrades and customizations enter the mix. Granite countertops, hardwood floors, upgraded lighting and extra storage can add thousands to the final cost. According to Zillow, buyers spend an average of 10 to 25 percent more than the advertised base price once upgrades are included.
Be informed that many new communities come with mandatory fees, such as homeowners’ association dues or special assessment taxes for things like road maintenance or sewer expansion. These costs may not be prominently featured in the brochure, so make sure you ask. Also, if you can, find out home much the HOA has increased over the past 5 years so you can have an idea what to expect.
Your yard is often the crown jewel of your home. Beware that in many new build communities, landscaping may include the front but rarely includes the back yard. If in the circumstance landscaping is provided, it might be the bare minimum, meaning sod, one tree and a few shrubs. The lawn is mainly your responsibility.
Before signing any contract, ask for a detailed list of what is included and what an upgrade is. This way you can make sure you stay on track with your budget. Some builders offer design center visits where you can price out features. These are good opportunities so you can be strategic about your home design and understand the total cost, not just the components.
Appraisals Can Be Tricky
During a bull market, builders often push prices higher with each new phase of development. This sounds great in theory; however, if the appraisals are not in line with the builder’s pricing, it will be an issue.
If the home appraises less than the contracted purchase price, the lenders will not finance the full amount. This leaves the buyers to make up the difference in cash or renegotiate with the builder. And because builders rarely lower prices once contracts are signed, buyers are often stuck with the higher price.
“Appraisal gaps are one of the lesser-known risks of buying new construction.” said James Leonard, a mortgage consultant with Fairway Independent Mortgage. “They can derail financing if the buyer isn’t prepared to bridge the shortfall.”
One way to protect yourself is by including an appraisal contingency in your contract, though some builders may resist. Be firm in negotiating this. Also, stay aware of comparable sales in the area. If your new building is significantly more expensive than existing or recently sold homes nearby, that could be a warning. While some premium is expected for new construction, lenders still rely heavily on resale comps to determine value.
Always Read the Fine Print
Unlike standard home sales, builder contracts are written by the builder’s legal team and heavily favor the developer. These agreements often include clauses that limit the buyer’s ability to cancel, cap the builder’s liability, and give wide latitude on delivery dates and construction changes.
Buyers often assume these terms are non-negotiable. We have found in many cases, it is true, the terms are non-negotiable. It is still critical to have the contract reviewed by a real estate attorney or a buyer agent experienced in new builds. You must understand what you agree to avoid unpleasant surprises down the road.
For example, some builder contracts allow substitutions of materials if a particular finish becomes unavailable. Unfortunately, that substitute may be of lower quality. Others builder contracts may include non-disclosure agreements preventing you from speaking publicly about defects or disputes.
“Builders have become increasingly sophisticated in how they protect themselves legally,” said Marsha Dugan, a real estate attorney based in Denver. “A buyer should never assume the paperwork is boilerplate.”
Having your own representation, even if the builder provides a sales rep, is a smart move. The builder’s agent works for the builder, not for you. A buyer’s agent or attorney can point out risks and negotiate better terms where possible.
Financing and Incentives May Favor the Builder’s Lender
Most builders partner with preferred lenders and title companies and may offer enticing incentives such as lower interest rates, closing cost credits, or paid upgrades. This is only if you use their in-house partners.
Regardless of how great the financing may seem, you should still shop around for the best deals. “A builder’s lender might offer convenience and perks, but it doesn’t always mean you’re getting the best mortgage terms.” said Keith Gumbinger of HSH.com, a mortgage research site. “Even a quarter-point difference in interest rate can add up to thousands over the life of a loan.”
Request loan estimates from at least two outside lenders and compare the offers side-by-side. If the builder’s lender is offering a below-market rate, find out the reason why. Also confirm the rate of terms as to whether it is locked or adjustable.
Additionally, review the fine print of any builder incentives. Some are tied to higher home prices, and others expire if certain deadlines are not met. Always do the math, not just the marketing.
Customization Is Not the Same as Full Control
One of the big selling points of new construction is the idea that you can “build your dream home.” But the extent of customization can vary widely depending on the builder and development type.
During a production building, where a developer is constructing dozens or hundreds of homes, customization is typically limited to pre-selected design packages. You might be able to choose between a few cabinet colors or flooring options, but structural changes or layout tweaks may not be possible.
With semi-custom builders, there is more flexibility, but also higher costs and longer timelines. True custom homes are the rarest and most expensive option, often out of reach for first-time buyers.
Buyers should also be prepared for decision fatigue. Selecting every finish, color, and feature can seem overwhelming, especially under time constraints. “Design appointments can feel like speed dating with your forever home,” said Natalie Morales, a homebuyer who moved into a new build outside Austin in 2023. “You’d think it’ll be fun, but it’s actually a lot of pressure.”
Inspections Are Still Necessary
A common misconception among first-time buyers is that new construction does not require an inspection. After all, since it is new, what could be wrong?
A lot can be wrong, which is why inspectors are required to do so. Independent home inspectors have reported finding everything from mis wired outlets to missing insulation and unsealed windows in brand-new homes. Builders may offer their own walk-throughs or inspections, but these are different from hiring your own professional.
Buyers should conduct two inspections: one before the drywall goes up (the pre-drywall inspection), and one before closing. This gives the inspector a chance to review the structure, plumbing and electrical systems before they are covered — and again once the home is complete.
Some buyers also opt for a third inspection at the 11-month mark, just before the builder’s one-year warranty expires. This can catch any issues that developed after move-in and help you get repairs covered under the warranty. It may seem to be an unnecessary expense at the time but, if there are issues that are found during those inspections, you will be very grateful that you made that investment.
The Community May Still Be a Work in Progress
When you move into a new build, you may also be moving into a construction zone. Streets may still be unpaved, landscaping unfinished, and amenities, like parks or clubhouses, are not yet operational.
This isn’t necessarily a problem, but it can affect your daily life and your sense of community. New neighborhoods can take years to fully develop, and the early months may be noisy, dusty, and less neighborly than you expect.
Buyers should drive through the development at various times of day and week to get a realistic sense of what living there will be like. Ask the builder for a phasing plan, which shows when future homes, roads and community features will be completed.
Also, find out whether the builder plans to sell lots to other builders. This can make a difference to the future value of your home in addition to the amount of construction in your neighborhood. Different developers in the same neighborhood can lead to inconsistent home quality and maintenance standards.
TL;DR: What First-Time Buyers Should Know About New Builds
- New builds are not immune to flaws; always get inspections, even if it is brand new
- Research the builder’s reputation thoroughly, it is as important as the house itself
- Construction timelines are often delayed; build flexibility into your plans
- The base price is not all inclusive; budget for upgrades, landscaping, and fees
- Appraisal gaps can derail financing, know your market, and ask for contingencies
- Builder contracts are written in their favor, review everything before signing
- Builder incentives can be good, but compare outside financing to avoid hidden costs
- Customization has limits, especially in large developments
- New communities may take years to fully mature, be ready for noise and ongoing work