Buying New Construction Before It’s Built: What to Know About Pre-Sale Contracts

Buying a home that doesn’t exist yet is a genuinely different process than purchasing a completed home, whether new or resale. If you’re considering a pre-sale or to-be-built purchase in a new construction community, here’s what to understand before you sign.

Understanding the Deposit Structure

Pre-sale contracts typically require a deposit at signing, often larger than a standard earnest money deposit on a completed home, and sometimes additional deposits at specific construction milestones. Understanding exactly when deposits are due, whether they’re refundable, and under what circumstances is essential before you commit, since your money is at risk for a longer period than in a standard transaction.

Price and Specification Risk

Builders sometimes reserve the right to substitute materials or make specification changes during construction due to supply availability, and in some contracts, to adjust the final price based on cost changes during a longer build timeline. Reading your contract carefully for any language allowing price adjustments after signing is essential — this is one of the most important protections to understand before committing to a pre-sale purchase.

Timeline Realities and Delays

Construction timelines for pre-sale homes are estimates, not guarantees, and delays due to weather, supply chain issues, labor availability, or permitting are common enough that you shouldn’t plan an inflexible move-out date from your current home around a builder’s projected completion date. Building in a buffer, and having a contingency plan if completion is delayed, protects you from being caught without housing.

Rate Lock Considerations

Because pre-sale construction can take many months, your mortgage rate lock timing becomes a genuinely important consideration. Standard rate locks typically run 30 to 90 days, which often doesn’t align with a longer construction timeline. Ask your lender specifically about extended rate lock options or float-down provisions designed for new construction timelines, and understand what they cost, since a standard rate lock may expire well before your home is ready to close.

The Value of Buyer Representation

Having your own agent represent you in a new construction pre-sale purchase — at no additional cost to you, since the builder compensates the buyer’s agent — means you have someone reviewing the contract specifically for your protection, not the builder’s sales timeline. This matters even more in a pre-sale situation than a completed-home purchase, given the additional risk factors involved.

If you’re considering a pre-sale new construction purchase, I’d strongly encourage bringing me in before you sign anything at the sales office. Reach me at 864.913.8295 or Ambur.Davis@Century21Blackwell.com.