By Eric Berman, REALTOR® | The Eric Berman Team at Compass
TL;DR:
A new construction purchase is not a real estate transaction with a nicer house at the end of it — it's a construction contract, written by the builder's attorney, for a product that doesn't exist yet. The buyer's protection is in the contract language and the independent inspections, and both are available only before signing.
Whose Paper Is This
The first thing to understand about buying new construction is that the document on the table is not the contract used for a resale house. It's the builder's own contract, drafted by the builder's attorney, and it is written to protect the builder.
That's not an accusation — it's how the industry works, and it's entirely predictable. What follows from it is the thing buyers miss: the terms that matter most are the ones a resale contract wouldn't have. Completion dates that are targets rather than obligations. Deposits that may be non-refundable at stages a buyer doesn't expect. Delay provisions that excuse the builder for causes broad enough to cover most of what actually causes delays. Dispute clauses that route disagreements to arbitration. Change order procedures that determine what a buyer can adjust and at what cost once framing is up.
Every one of those is negotiable to some degree before signing and none of them are negotiable after. Which makes the sequence non-negotiable in the other direction: the real estate attorney reads this contract before the buyer signs anything, including whatever the sales office calls a reservation agreement. New York is an attorney state and this is the transaction where that matters most.
The other structural fact: the person in the model home is the builder's agent. They're doing their job well and their job is not representing the buyer.
The Model Home Is a Sales Tool
The model is built to the highest specification the builder offers, and almost nothing in it is standard.
The flooring is an upgrade. The cabinets are two levels above base. The appliance package, the fixtures, the trim, the lighting — upgrades. The landscaping that makes the exterior work is frequently not included at all, and neither is the finished basement, the patio, or the driveway extension. A buyer who walks a model and mentally prices the house they just saw is pricing a house that costs substantially more than the number on the sheet.
The fix is unglamorous: get the standard specification in writing, in detail, and compare it line by line against what was in the model. Then price the delta. Buyers routinely discover that reaching the model's finish level adds sixty or eighty thousand to a base price they'd already stretched to reach — and by then they've decided they want it.
Which raises the question of where the upgrade money should go, and there's a real answer. Structural changes — the ones involving framing, plumbing rough-in, electrical rough-in, window placement — can only happen during construction and are enormously expensive to retrofit later. Cosmetic upgrades can be done afterward, frequently for less than the builder charges. A buyer with a finite budget should spend it on what can't be changed later and defer what can.
The Inspections Buyers Skip
The most expensive assumption in new construction is that a new house doesn't need an inspection because the municipality inspects it.
The municipal inspector is confirming code compliance — a floor, not a ceiling, and one applied on a schedule that doesn't catch everything. An independent inspector working for the buyer is checking whether the work is actually right. Those are different questions, and on a house that will be closed up permanently, the difference shows up years later.
The useful structure is phased. A pre-drywall inspection is the single highest-value one and it's the one buyers most often don't know to ask for: once the drywall goes up, the framing, the plumbing rough-in, the electrical rough-in, the insulation, and the flashing details are invisible for the life of the house. That's a one-time window measured in days. A final inspection before closing catches the finish work and generates the punch list. And a warranty-expiration inspection — timed before the builder's first-year coverage lapses — is how a buyer surfaces the settling cracks, the HVAC balance problems, and the grading issues that appear over the first year while someone else is still obligated to fix them.
The right to conduct these belongs in the contract. A builder who resists an independent pre-drywall inspection has said something worth hearing.
Delays, Rates, and What the Contract Says About Both
Construction runs late. The question isn't whether — it's who bears the cost, and the contract answers that.
The delays are real and mostly not the builder's fault: permits, weather, material and labor availability. But the contract's delay provisions determine whether a six-month overrun is the builder's problem or the buyer's. A buyer whose lease ends on the original completion date, holding a contract with broad force majeure language and no outside date, has a housing problem and no remedy.
The financing wrinkle is the one that costs real money. A rate lock has a term, and construction timelines outrun locks routinely. Extended lock programs exist and they cost something; float-down provisions exist and they cost something else. What doesn't work is locking on the builder's stated completion date and assuming it holds — a buyer who locks for ninety days on a build that takes a hundred and fifty relocks at whatever the market is doing that month, which can move the monthly payment materially.
The other financing trap: builders frequently offer meaningful incentives — closing cost credits, upgrade allowances, rate buydowns — conditioned on using the builder's affiliated lender. Sometimes that's genuinely the best available deal. Sometimes the incentive is smaller than the rate premium. That comparison is arithmetic and it's worth doing rather than assuming, and it's a lender conversation that should happen with an outside quote in hand.
What This Service Covers
Representation, first — a buyer walking into a model home unrepresented is negotiating with a professional who works for the other side. The registration rules matter here: many builders require a buyer's agent to be present at the first visit or they won't recognize the representation later, which means the call comes before the visit rather than after.
On the contract: attorney engagement before anything gets signed, including reservation agreements, with attention to the terms that separate a builder contract from a resale one — completion obligations versus targets, deposit refundability and its triggers, delay and force majeure language, an outside date if one can be negotiated, change order procedure, warranty scope and duration, and dispute resolution. Legal advice stays with the attorney; the job here is making sure the buyer knows which clauses to ask about.
On the money: the standard specification obtained in writing and priced line by line against the model, so the real number is known before the emotional commitment. Guidance on directing upgrade budget toward structural changes that can't be retrofitted rather than cosmetic ones that can. Builder incentive versus affiliated-lender arithmetic, run against an outside quote. Rate lock strategy matched to a realistic timeline rather than the builder's stated one.
On the build: phased independent inspections — pre-drywall above all, then final, then pre-warranty-expiration — with the right to conduct them written into the contract. Progress monitoring through the phases, punch list management, and coordination of the warranty claims that surface in year one.
How This Usually Plays Out
The most common version: a buyer falls for the model, signs a reservation agreement in the sales office on a Sunday because it's refundable and it holds the lot, and sends the contract to an attorney three weeks later when the builder's paperwork arrives. By then the deposit structure is set, the completion language is boilerplate the builder won't reopen, and the negotiating window closed before anyone knew it was open. Nothing about that was avoidable at week three. All of it was avoidable at hour one.
The other one is the drywall. A buyer who didn't know a pre-drywall inspection was a thing, in a house where the plumbing rough-in has an issue that a municipal inspector's schedule didn't catch. It's behind a wall now. It surfaces in year three as a stain on a ceiling, and by then the warranty has lapsed and the conversation is about whether it's a defect or maintenance. The inspection was six hundred dollars and a two-day window.
FAQs
Does a new construction buyer need their own agent?
Yes, and the timing is specific: many builders require the buyer's agent to be present at the first visit or won't recognize the representation afterward. The person in the model home is the builder's agent — doing their job well, for the builder. A buyer walking in unrepresented is negotiating a construction contract against a professional who works for the other side.
Are inspections necessary on a brand-new house?
More necessary than on a resale, and phased. The municipal inspector checks code compliance, which is a floor rather than a ceiling. A pre-drywall inspection is the highest-value one and the window is days long — once drywall goes up, the framing, rough-ins, insulation, and flashing are hidden for the life of the house. Then a final for the punch list, and one before the warranty expires.
Do builders negotiate on price?
Less often on price, more often on incentives — closing cost credits, upgrade allowances, and rate buydowns, frequently conditioned on using the builder's affiliated lender. Whether that trade is good is arithmetic: sometimes the incentive exceeds the rate premium and sometimes it doesn't. The comparison needs an outside quote in hand.
What happens if construction runs late?
That depends entirely on the contract, which is why it gets read before signing. Delay and force majeure provisions determine whether an overrun is the builder's problem or the buyer's, and whether there's an outside date with any consequence attached. The related risk is the rate lock — construction routinely outruns lock terms, and relocking happens at whatever the market is doing.
Where should upgrade money go?
Toward what can't be changed later. Structural work — framing, plumbing and electrical rough-in, window placement — happens once and is enormously expensive to retrofit. Cosmetic upgrades can usually be done afterward for less than the builder charges. A finite budget should buy the irreversible things first.
Before the First Signature
New construction rewards the buyer who treats it as a construction contract rather than a house purchase — attorney before the reservation agreement, standard spec priced against the model, upgrade money aimed at what can't be undone, and an inspector in the house before the drywall closes it up. Every one of those has a window, and every window closes early.
For buyers ready to see what's available, the search portal is the place to start. The conversation about a specific builder's contract is welcome whenever it's useful — ideally before the model home visit.
By Eric Berman, REALTOR® | The Eric Berman Team at Compass
Eric Berman | Long Island & Queens REALTOR® | Compass
1468 Northern Blvd, Manhasset, NY 11030
(917) 225-8596 | eric@ericbermanteam.com | theericbermanteam.com
