What Home Builders Won’t Tell You About New Construction Contracts
Why a Builder’s Contract is Not Like a Resale Agreement
When you buy a resale home in Las Vegas, the contract is a standard, state-approved document. It’s designed to be relatively neutral, protecting both the buyer and the seller.
When you buy a new construction home, the process is completely different. The builder hands you a 50+ page contract drafted by their attorneys. It is a powerful, one-sided legal document designed to protect the builder’s profits, timeline, and liability—often at your expense.
As a New Construction Expert in Summerlin and the Greater Las Vegas Valley, I want to equip you with the knowledge to level the playing field. This post reveals the five clauses and contract secrets that builders hope you skip right over.
Secret 1: The One-Sided Appraisal Clause (You Pay the Difference)
This is perhaps the most significant difference between a resale and a new build contract, and it is the clause that costs unprepared buyers the most money.
What They Tell You
The sales agent will assure you that the home will appraise for the contracted price.
What the Contract States
Builder contracts are typically NOT contingent upon the home appraising for the purchase price.
If the appraisal comes in low, the builder is not obligated to lower the price to meet the appraised value. Instead, the contract often requires the buyer to pay the difference in cash at closing.
Example:
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Contracted Price: $750,000
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Appraised Value: $720,000
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Builder’s Requirement: You must bring an extra $30,000 in cash to closing to make up the difference, or you risk losing your earnest money deposit.
Secret 2: The Two-Year "Force Majeure" and Completion Clause
You’re likely excited to move in on the estimated date the sales agent gave you—say, eight months from now. Unfortunately, that date means very little once you read the fine print.
What They Tell You
You are given an estimated closing window based on the current construction schedule.
What the Contract States
Builders give themselves a massive amount of leeway—often up to 18 to 24 months—to complete the home. This protection is found in the "Force Majeure" or "Time of Completion" clauses.
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Builder Delays: The builder can delay the closing date due to supply chain issues, labor shortages, weather, or permitting problems without penalty.
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Your Penalty: If you, the buyer, try to walk away because of a delay, the contract will likely stipulate that you forfeit your earnest money and any money paid for upgrades.
In short, the builder has a guaranteed out for delays, but you, the buyer, are locked in and must perform on their timeline.
Secret 3: They Reserve the Right to "Substitute" Materials
You chose a specific type of tile or countertop from a sample. Your contract, however, gives the builder the right to change their mind on materials.
What They Tell You
They promise a high-quality, defined finish package.
What the Contract States
Look for language that allows the builder to substitute materials, appliances, and fixtures with items of "comparable quality and cost" or simply "available" alternatives.
In a competitive market with supply chain pressure, this clause allows the builder to switch to cheaper, more readily available products without your consent—or your ability to negotiate a credit. Once the product is installed, arguing over whether it is "comparable" becomes a legal battle the builder is set up to win.
Secret 4: The Earnest Money & Upgrades Forfeiture Clause
In a resale deal, your earnest money is a standard percentage of the price. In a new construction contract, the required deposit is often far larger and far more at risk.
What They Tell You
Your deposit secures the lot and your purchase.
What the Contract States
The builder's contract generally states that if you default (even if your financing falls through, or you can't cover a low appraisal), the builder gets to keep:
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Your full earnest money deposit.
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All money paid for your structural and design upgrades.
This means if you've put down $50,000 for the lot and $30,000 in upgrades, you can lose the entire $80,000 immediately, even if the builder immediately re-sells the home for a higher price. This is one of the biggest risks you face, and it's why having an advocate is essential.
Secret 5: Restrictive Re-Sale and Lease Clauses
Once you close, the home is yours, right? Not entirely. Some builders protect their continued sales in the community by restricting your rights to your own property for a period of time.
What They Tell You
You’re getting a brand new home in a desirable community.
What the Contract States
Many builder contracts include a clause that restricts the buyer from selling or leasing the home for up to 6 to 12 months after closing.
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Why? The builder does not want you competing with their own remaining new inventory by selling your home or leasing it out right next door.
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The Impact: If you have an unexpected job change or family emergency, this clause traps you. If you attempt to sell, the builder often reserves the right of first refusal to buy the property back at a lower price.
Insert live URLs once each linked post is published.
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[Insert internal link to Post 3: Top Red Flags in Builder Contracts]
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[Insert internal link to Post 6: First-Time Buyer Guide Las Vegas]
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[Insert internal link to Post 9: Should You Sell Your Summerlin Home?]
The Bottom Line: Contracts are Where Representation Matters Most
The builder’s sales agent is paid by the builder, works for the builder, and is legally obligated to protect the builder’s interests. They will not point out the risks to you.
The only person at the closing table who is legally bound to protect your financial interests is your dedicated Buyers Representation [Do You Need a Buyer’s Agent for New Construction?] who specializes in new construction.
Before you meet with a builder, download my comprehensive Contract Red Flags Checklist to know exactly which clauses to push back on.
📞 Your Next Step
Ready to discuss your new construction strategy and ensure your contract is as fair as possible?
Let's discuss your timeline and ensure you have an expert on your side from day one.
Contact me today for a no-obligation consultation. 702.235.8485 text or call
You can also schedule a Buyer Protection Review:
https://calendar.app.google/JkzedXKhvtyXbHiC8
Explore Summerlin Master Plan Ammenities Here:
https://www.pinkbugrealtor.com/las-vegas-NV/summerlin
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