New construction builder contracts are written by the builder's lawyers, for the builder. On a resale, Colorado buyers get the Commission's Contract to Buy and Sell with dated deadlines and clean exits. With a builder, most of those protections shrink or disappear. I came out of construction before I sold homes, and this is where I see agents get blindsided. Here's what to know and how to protect your buyer.
The short answer
Builders use their own purchase agreement. Compared with the Colorado contract, earnest money and upgrade deposits often become non-refundable fast, the buyer can inspect but usually can't cancel over it, the closing date is an estimate the builder can extend, materials can be substituted, and disputes often go to binding arbitration. Your value is reading it, flagging the risks, and negotiating where the builder has room.
Step by step
- Register on the first visit. Most builders require the buyer's agent to come along, or register the buyer in writing, before the buyer's first visit to the sales office. Miss this and the builder may treat your buyer as unrepresented.
- Get the contract early. Ask the sales office for a blank copy of the purchase agreement before the buyer picks a lot. Read it together.
- Flag the money terms. When does earnest money go non-refundable? Are design center deposits refundable? What happens if the buyer's loan falls through?
- Read the timeline language. Is closing a firm date or an estimate? What delays can the builder claim? This matters for the buyer's lease and rate lock. See rate lock timing.
- Check the appraisal clause. Many builder contracts make the buyer cover any appraisal gap. Plan cash.
- Order independent inspections. Pre-drywall and final inspections by a licensed inspector the buyer hires. The builder's own walkthrough isn't an inspection.
- Read the warranty. What's covered, for how long, and how to file claims. Calendar the 11-month warranty walk if the builder offers one.
- Check taxes and districts. New communities often have metro district debt. See HOA vs metro district.
- Compare incentives. Builder lender incentives need a second quote. See builder incentives.
- Suggest a real estate attorney if the buyer wants contract language reviewed. That's not your job.
Resale vs builder, side by side
| Term | Colorado resale contract | Typical builder contract |
|---|---|---|
| Earnest money | Refundable on deadline terminations | Often non-refundable after a short window |
| Inspection | Buyer can object or terminate | Buyer inspects; builder repairs to its standard |
| Appraisal | Buyer can object by deadline | Buyer may have to cover the gap |
| Closing date | Fixed date | Estimated; builder can extend |
| Disputes | Mediation, then court | Often binding arbitration |
How to explain it to your client
"The person in the model home works for the builder. I work for you. The builder's contract is written for the builder, so a lot of the protections you'd get buying a resale aren't there. Your deposit may become non-refundable fast, the closing date can move, and you'll probably cover any appraisal gap. Let's read it line by line before you put money down, and we'll get your own inspector in before drywall and before closing."
Watch-outs
- No first-visit registration, no representation. Call your buyers before they tour new homes on a weekend.
- Builder delays break rate locks and leases. Build in cushion.
- Upgrades don't always appraise. Big design center spending can create a gap.
- Spec homes are negotiable. Finished inventory homes often have the most room on price or incentives.
- Not legal advice. You explain business terms. An attorney reviews legal language.
Further reading
- Why Colorado buyers bring their own agent to the builder on kennarealestate.com
- New construction homes in Colorado on kennarealestate.com
This is training for real estate agents. It isn't legal advice. Talk to an attorney about contract language. Check with your managing broker.
Questions
Does the buyer pay more to use their own agent with a builder?
Builders usually budget for buyer agent pay. Confirm in writing at registration and in your buyer agreement.
Can my buyer use the Colorado contract with a builder?
Almost never. Builders require their own agreement.
Should my buyer get an inspection on a brand-new home?
Yes. New homes have defects too. Pre-drywall and final inspections are worth it.
Can we negotiate with a builder?
Often on incentives, closing costs, upgrades or lot premiums, especially on finished spec homes.
What's the warranty walk?
Many builders offer a walkthrough near the end of year one to fix covered items. Calendar it for your client.
Brian Lee Burke is the founder of PadLeaders, a Colorado real estate broker licensed since 2003, team leader of The Kenna Group at Keller Williams DTC (formerly Kenna Real Estate Group) and the author of Mastering Real Estate and The Real Estate Playbook. More about Brian.