Own Luxury Homes®
Buying New Construction: Complete Buyer's Guide
On-site sales agent works for builder, not you. DR Horton 87,000 homes/yr; Lennar 82,500+ — standard contracts include: mandatory arbitration, deposit forfeiture (liquidated damages), no-monetary-damages clause, preferred lender incentives. Design center upgrades: 15–60% markup vs independent; flooring $20–40/sqft vs $10–12 independent. Structural upgrades (ceiling height, electrical rough-in): worth buying at contract. Phase inspections: pre-drywall, pre-closing, 11-month warranty — $800–1,500 catches $5–30K issues. Own Luxury Homes® 12-Point Agent Integrity Audit™ — bringing your own agent costs you nothing.
Buying New Construction: What the Builder Won't Tell You — The Complete Buyer's Guide
New construction home buying is structurally different from buying a resale home in one critical way: every person at the builder's sales office — the sales representative, the design center consultant, the mortgage officer — is employed by the builder and compensated to advance the builder's interests. There is no one in that building whose job is to represent you. This is not a criticism of any individual. It is a structural fact that every new construction buyer needs to understand before they walk through the model home.
The Core Conflict: Builder's Agent vs Your Agent
Why the On-Site Agent Cannot Represent You
The on-site sales representative is a licensed real estate agent — but they are the builder's listing agent, not your buyer's agent. In most states, they owe fiduciary duties to the builder: loyalty, confidentiality of the builder's negotiating position, and the obligation to maximize the builder's outcome. They cannot simultaneously advise you to negotiate harder, flag contract provisions that disfavor buyers, or recommend you use an independent lender. Their financial incentive: sell the home at the builder's target price, using the builder's preferred lender, with the builder's upgrade package. Bringing your own buyer's agent changes this: you have an advocate in the room whose compensation depends on your satisfaction, not the builder's.
What Builder Contracts Actually Contain
| Clause | What It Means for Buyers | Negotiable? |
|---|---|---|
| Mandatory arbitration | All disputes resolved in private arbitration, not court; waives right to jury trial; no class action; found unconscionable in some states but generally enforced | Rarely; sales reps have no authority to modify |
| Deposit forfeiture (liquidated damages) | If buyer cancels for any reason not explicitly covered, builder retains entire deposit; can apply even if builder causes delays or price increases | Not negotiable at most production builders |
| No monetary damages / liability limitation | Builder limits liability for defects, delays, and contract breaches; buyer may recover nothing beyond original purchase price even if builder is at fault | Not negotiable at major production builders |
| Price escalation clause | Builder may increase price for materials cost increases after signing; some contracts have caps, many do not | Cap amount may be negotiable; existence usually is not |
| Preferred lender incentives | Closing cost credits, rate buydowns tied to using builder's affiliated lender; RESPA allows you to use any lender; incentives may be forfeited if you choose independently | Incentives are non-negotiable; lender choice is yours |
| Completion date / delay penalty | Builder has wide latitude on completion timing; most contracts specify no penalty for builder delays; some impose per-day penalties on buyer if buyer delays closing | Delay penalty on buyer may be negotiable in some markets |
The Preferred Lender Question: Use the Builder's Lender or Your Own?
The Real Analysis
Builder-affiliated lenders (DHI Mortgage for DR Horton, Lennar Mortgage, Pulte Mortgage) offer rate buydowns and closing cost credits contingent on using their financing. These incentives are real and can be significant. The analysis: obtain a Loan Estimate from the builder's lender AND from two independent lenders. Compare: interest rate, origination fees, discount points, PMI costs, and total cost over the life of the loan minus the incentive value. A $10,000 closing cost credit that costs you $15,000 more in total interest over 30 years is not a good deal. A $10,000 credit that saves you $8,000 in total interest is a good deal. The math takes 20 minutes and is worth doing every time.
The Design Center: What You're Walking Into
How Builder Upgrade Pricing Works
The design center appointment typically happens under time pressure (a fixed window after contract signing). You are sitting with a design center consultant who is paid, in whole or in part, on the revenue they generate from your upgrade selections. Builder upgrade markups range from 15–60% above what you could source and install independently. For flooring specifically: builders often charge $20–40 per square foot to upgrade from base carpet to engineered hardwood — the same material installed independently runs $10–12 per square foot. The exception: structural upgrades (ceiling height, foundation options, electrical rough-in, plumbing rough-in, structural beams) must be done at contract time and cannot be added later. These are worth paying for. Cosmetic upgrades (flooring, backsplash, countertops, light fixtures) can almost always be done independently after closing for significantly less.
Phase Inspections: The Three You Cannot Skip
Why New Construction Needs Independent Inspections
Builder-employed inspectors and municipal code inspectors verify code compliance, not quality. An independent licensed home inspector hired by you, reporting to you, at three stages of construction catches issues while they can still be corrected without tearing out finished work. The three phases: (1) Pre-drywall: framing, plumbing rough-in, electrical rough-in, HVAC rough-in, insulation; this is the only time to see what's inside the walls before they close. (2) Pre-closing: all systems operational; condition matches contract specifications; cosmetic and functional deficiencies documented for the punch list. (3) 11-month warranty inspection: before the typical 1-year builder warranty expires; documents all defects that appeared in the first year of occupancy. These three inspections cost $800–1,500 total. They regularly catch $5,000–30,000 in issues that the builder addresses under warranty.
“The new construction conversation I have before every builder tour: "Everyone in that building works for the builder. The sales rep. The design center consultant. The mortgage officer. They are all compensated to advance the builder's interests. That doesn't make them bad people. It makes them the builder's team. You need your own team. Bringing me costs you nothing — the builder has already priced the commission into every home they sell. The question is whether that money goes to an agent who represents you or whether the builder just keeps it."”
— Ryan Brown, Principal Broker & CEO, Own Luxury Homes®
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"The introduction Own Luxury Homes® makes is to a specialist with documented closing history in your specific market — not the county, not the metro, the submarket you're actually selling or buying in. That's the standard we verify before your name goes anywhere."
— Ryan Brown, Principal Broker & CEO, Own Luxury Homes® (FL License BK3626873)