The Skinner Team

Buying in a New Construction Development

From timing to contract terms to customization options, it’s important to be aware of what purchasing new construction entails! Read on to learn more about purchasing new construction. For more information about local New Construction opportunities, click here.

  • #1 Seek Representation
  • #2 Understand the Builder’s/ Developer’s Contract
  • #3 Timing for completion isn’t set in stone
  • #4 Warranties and Inspections
  • #5 Extra Materials
  • #6 Furnishing and Moving In

#1 Seek Representation (a Real Estate agent)
While you can certainly work directly with the builder, keep in mind- they are the ones that create the terms of their contract, which directly benefits them. We encourage buyers purchasing in new construction developments to seek out agent representation to have an advocate that is truly on their side. An agent will ensure the purchase process is as stress free as possible if or when obstacles arise. 

#2 Understand the Builder’s/ Developer’s Contract (it is NOT the standard Contract to Buy)
Every builder / developer uses a different purchase agreement, and they do not use the Colorado Contract to Buy and Sell. Since they are all unique, the terms in each will be as well. It is vital to understand items such as:
A. Earnest Money Deposit(s) and Total Price – What stages in construction are deposits due, and when does your money go hard (meaning non-refundable if you back out)? Are there upgrade costs or other fees? What will your total capital needed be at closing? Is there a clause that allows the developer to increase the price you will pay if building costs go up?
B. Financing Deadlines- When does your financing need to be approved/ When should you engage a lender? Do you need to improve your credit score before securing a loan?  If your build is 2 years out, you likely won’t solidify lending until about 90 days from closing. Does the contract include a clause that lets you out if you can’t secure financing, especially if this is due to a delay in construction?
C. Upgrades- What are your upgrade options? When do you have to make your finish selections by? What is the additional cost, if any?
D. Inspections- What types of inspections are allowed? What inspections will the builder do (i.e. radon)? Are there inspection related deadlines? Will you have a punch list walkthrough?
E. Specifications- Make sure floor plan, amenities, and specifications are written into the agreement.
F. Fees & Utilities- Are there homeowners or condo association dues, transfer fees, management fees, etc.? Generally the builder keeps control of the association until they are finished building and selling all units. What utilities are your responsibility after closing?
G. Legal Assistance- While we can help you fill in the blanks in the purchase agreement, this isn’t the standard contract and not in Real Estate Brokers’ purview to make amendments. So, if you have questions about terms and if you want to attempt to change anything with the builder, we suggest contacting a Real Estate Attorney.

#3 Timing for completion isn’t set in stone
Developers estimate completion dates, though things like weather, labor shortage, material shortage, and material cost increase can all delay construction. Have a plan if construction is delayed and you were planning on this to be your primary residence. If 18 months turns into 2 years, are you prepared for that?

#4 Warranties and Inspections
Make sure you ask the builder what type of builder warranty will come with your new home. What systems are completely covered, and for how long?  How many days after closing will you have to identify cosmetic issues? If the builder’s warranty only guarantees the structures, can you purchase an additional home warranty for all of the systems?
Before closing, it is a great idea to have a professional home inspection from a third party, and you may need permission from the builder. Some builders arrange this themselves, and in other new construction it is buyer responsibility.

#5 Extra Materials
If the builder happens to have extra materials or paint, ask if you can keep some after closing. Think trim, flooring, carpet swatches, tile. 

#6 Furnishing and Moving In
Research early on about furnishings in case you want custom items for your newly constructed retreat! Do you want to utilize a designer, or would you like to source pieces locally yourself? If you order online, make sure they will deliver via ground to your address. Be sure to investigate moving companies as well, and what sort of timeline they can work with, and keep in mind you should always move these items by yourself.

If you work with our team, we will check on all of the above for you during the process, leaving you with peace of mind as you await your new build. If you have any questions or would like to know about new construction opportunities, email us at . If you’d like to know more about the home buying process in general, click HERE