If you're considering buying a new construction home, there are some crucial things your builder may not tell you upfront. As a local Coastal Maryland and Delaware real estate expert, I’ve helped many buyers navigate the new-build process, and I’ve seen firsthand what builders don’t always disclose. If you would rather watch the video version, check it out below or continue to scroll as I write out all the key points.
Here are eight key things you should be aware of before signing a contract with a home builder.
1. Transfer & Recordation Taxes – Who’s Paying?
In Coastal Delaware, transfer and recordation taxes can be significant, amounting to 4% of the home’s purchase price. When buying a resale home, these taxes are usually split 50/50 between the buyer and seller. However, many builders pass the full 4% cost onto the buyer, which can add up quickly.
For example, on a $700,000 home, that’s $28,000 in additional closing costs. Some builders will split this with you as part of an incentive package, but it's important to ask upfront. This is also something you can negotiate!
2. Builder Incentives Often Require Using Their Lender
Builders frequently advertise attractive incentives—such as closing cost assistance or design upgrades—but these often come with a catch: you must use the builder’s preferred lender.
While this isn't necessarily a bad thing (since the lender is familiar with the builder’s process), you should always compare rates and fees with an independent lender. Some builders even own a stake in the lender or settlement company, so be sure to review all fees carefully.
3. HOA Fees Will Likely Increase
If your new home is in a planned community, it will likely have a Homeowners Association (HOA) or condo fee. These fees cover amenities like lawn maintenance, pools, and clubhouses.
However, when a community is in its early stages, HOA fees are often lower than they will be once the neighborhood is 50% or more built out. Once the community is complete, fees could rise significantly—so ask about projected increases before you buy.
4. Your Property Taxes Will Go Up
When purchasing a new build, initial property taxes are often based only on the land value—not the finished home. This means that once the home is built and reassessed, your property taxes will likely increase.
While property taxes in Coastal Delaware are generally low, make sure you get an estimate from the builder so you aren’t caught off guard by a higher tax bill down the road.
5. You Have the Right to Your Own Realtor
The sales representatives in a builder’s community work for the builder, not for you. They may not openly suggest you use a buyer’s agent, but you absolutely can—and should! I have a great relationship with a lot of builder reps and most are very knowledgeable and courteous but they will more so tell you what the regular incentives they have and not necessarily go to bat for you to negotiate more of a deal.
Having your own Realtor means you have someone who has been through the process looking out for your best interests, negotiating on your behalf, and ensuring you understand all terms of the contract. The one thing I hear often from my clients is that they are thankful for the help with knowing the local area and all communities available to give suggestions and help narrow down those that would be a good match for their goals. Plus, most builders will cover the buyer agent compensation and have that built into their budget. Winner!
6. Builder Contracts Favor the Builder
Unlike standard real estate contracts, builders use their own custom contracts, which are designed to be fair but definitely protects their interests. These contracts often have strict timelines and penalties.
Always read the contract carefully, ask questions.
7. Base Pricing vs. Actual Pricing
Builders advertise "starting prices" to grab your attention, but the final cost of your home is often much higher once you factor in:
- Lot premiums (extra for a premium lot, such as a wooded or water-view lot)
- Interior upgrades (tile choices, cabinets, countertops, flooring)
- Structural upgrades (extra windows, extended patios, finished basements)
Some builders can require $100,000–$200,000+ in upgrades just to match what’s shown in their model homes. It’s important to budget for these additional costs upfront. Keep that in mind as you budget.
8. Future Development Could Change Your View
That open field behind your lot? It might not always be there.
Builders don’t always disclose future development plans nearby. A peaceful pond view today could turn into a shopping center, more homes or a highway in a few years. Check local planning and zoning websites to see what’s proposed for the surrounding area before making your purchase.
Final Thoughts
Buying a new construction home is exciting, but knowing these eight key factors can help you make an informed decision and avoid unexpected surprises.
If you’re thinking about purchasing a new build in Coastal Maryland or Delaware, I’d love to help! Reach out anytime—I can guide you through the process, help you negotiate the best deal, and ensure you get the home that’s right for you.
📞 Contact me today for expert advice on new construction homes in the area!
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