Buying a New Construction Home: Contracts, Inspections and Warranties
How buying from a builder differs from a resale purchase, from builder contracts and representation to inspections at each stage and what a builder warranty covers.
By the iNIAZ team · Published · 2 min read
A newly built home can mean modern systems and finishes chosen by you. The purchase process is different from buying a resale home, though, and the differences matter.
Who represents whom
The salesperson in a builder's model home works for the builder. You can bring your own agent to represent you, and it is easiest to do so on your first visit, since many builders require it then.
The contract is the builder's
Builders usually use their own purchase agreements rather than the standard forms used for resale homes. These contracts are often written in the builder's favor. Read for:
- the deposit and when it becomes non-refundable;
- how the completion date can change, and what happens if it slips;
- what is included in the base price, and how upgrades are priced and paid for;
- whether you can have independent inspections;
- dispute resolution, such as arbitration requirements.
Consider having a real estate attorney review the agreement before you sign.
Inspect even a brand-new home
Municipal inspections check code compliance at points in construction, but they are not a substitute for an inspector working for you. Common checkpoints are:
- Pre-drywall, when framing, wiring, plumbing and ductwork are still visible.
- Final, before settlement, to produce a list of items for the builder to complete or correct.
- Before the warranty ends, to catch problems that appeared after move-in.
Understand the warranty
Builders typically offer a limited warranty that covers different parts of the home for different periods, often longer for structural elements than for finishes. Get it in writing, learn how to submit claims, and keep records of every request.
Financing and timing
Construction timelines can change, so ask how long a mortgage rate lock lasts and what an extension would cost. Some builders offer incentives for using their affiliated lender. Compare those offers with quotes from independent lenders, looking at the full cost of the loan.
Taxes and costs
Ask how realty transfer tax applies to your purchase, since the treatment of new construction depends on how the deal is structured. See our guide to Pennsylvania realty transfer tax.
Thinking about a new home? Start a search or talk with us about builders in the areas you are considering.
General information, not legal, tax or financial advice. Confirm details that matter to your situation with a qualified professional.