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Buying a New Construction Home – Process, Upgrades & Unexpected Costs


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When my husband and I set out to buy a house, we searched high and low for the perfect home. Unfortunately, the more we looked, the more we came to realize that most of the houses in our target neighborhood just weren’t meeting our needs. Several were too small, many had extremely outdated kitchens and bathrooms, and most lacked closets and storage space. So when the opportunity arose to purchase a new construction home in a small development, we jumped at the chance to design our own home.

What Is a New Construction Home?

New construction homes often exist as just a shell prior to purchase. From the outside, they look built, but no work is done on the inside. For instance, there’s typically no plumbing or electrical, and the walls are not yet framed.

The builder’s process often works as follows: The rough framework of the house already exists along with a flexible floor plan, and its square footage is set. However, the buyer gets to control numerous aspects of its layout and all the design elements, from flooring to countertops.

In our case, we got to choose whether we wanted four bedrooms or five, full bathrooms or half baths, and an upstairs laundry room versus one downstairs. We also got to control whether the lower level would have an open flow from the kitchen through to the dining and family rooms, or whether there would be walls separating the various rooms.

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The Contract

When buying new construction, you’re presented with a contract that spells out the builder’s obligations. It should specify the components and features that are included in your home’s purchase price, but it may not list all the items or features that are specifically excluded.

For example, the section that talked about appliances in our contract stated that our builder would supply a “standard” refrigerator, but it didn’t define what “standard” meant. It also didn’t specifically state that a washer and dryer would not be provided; rather, these items simply weren’t mentioned.

After reviewing our contract and noting which items weren’t mentioned, we came up with a budget to cover not just the down payment for the house, but also excluded items (such as the washer and dryer), as well as upgrades and unexpected expenses. We figured we’d want to invest in some upgrades, such as granite countertops and stainless steel appliances for our kitchen, and since friends who’d been through a similar building process warned us to anticipate some hiccups, we felt much more comfortable having a bit of wiggle room. This is especially important if you’ll be taking on a home construction loan.

In the end, it was a good thing we padded our budget, because despite our best efforts, we still wound up going over it. Some of it boiled down to poor planning on our part, but a lot of it stemmed from ambiguities in our contract that ultimately worked in our builder’s favor. If you’re thinking of working with a builder to construct your home, be aware of the many construction costs that could creep up on you if you don’t thoroughly review your contract and ask questions.

New Construction Upgrades

Whether you’re building a house from the ground up or are customizing a prefabricated unit in an existing development or building, most new construction homes feature builder-grade products. Unless your contract says otherwise, there’s a good chance everything from your doorknobs to your light fixtures will be builder-grade, which means basic materials and lower quality. For this reason, many people who purchase new construction homes choose to upgrade their properties’ features during the building process.

To get a sense of how much money you may need to allocate toward upgrades, ask your builder for an opportunity to view finished models. From there, you can compare what you see to what’s specifically called out in your contract. Had we done that ourselves, we perhaps would have realized that our kitchen cabinets and drawers did not come with handles. Our contract had simply specified the number and size of the cabinets included.

Builder-Issued Credits

Some contracts include a section or appendix that covers builder-issued credits for upgrades. Since it’s common practice for buyers to upgrade during the construction process, many builders list the value of specific line items in their contracts so that buyers know what credits to expect when upgrading or substituting their own purchases. These credits can apply to everything from flooring to appliances.

For example, our contract listed the credit value of our kitchen sink at $60, which meant that if we opted to purchase our own (which we ultimately did), we’d get $60 knocked off the amount due at closing. Many contracts work in a similar fashion, where credits are totaled and then deducted from the final purchase price.

Sticking to what’s included in your contract can help you keep costs to a minimum – but keep in mind that upgrading during the initial construction phase is generally cheaper than updating your home later on. For example, if you choose to upgrade from laminate flooring to hardwood, you’ll pay the difference in material costs – but you won’t necessarily have to pay extra for the installation itself, since your builder needs to install floors in the first place. The same goes for things like windows and bathroom features.

Though there could be countless opportunities to upgrade when buying new construction, these items are popular among homeowners:

  • Countertops. Countertops can be tricky to fit and install, so it often makes sense to upgrade them during construction. Many builders’ contracts call for basic laminate kitchen and bathroom countertops, which are frequently prone to chipping and staining. Choosing higher quality marble or granite over laminate countertops could mean shelling out anywhere from $1,000 to $5,000 (or more) depending on the size of your kitchen and the specific stone you choose.
  • Showers and Tubs. Many new construction homes call for prefabricated showers and tubs. If you have your heart set on a spa shower or separate shower-tub configuration, you can save thousands of dollars in the long run by upgrading your bathroom during the construction process. On the other hand, you can easily spend $5,000 or more on your bathroom upgrades if your dream setup includes a whirlpool tub or an oversized steam shower.
  • Carpeting. Builder-grade carpet can be scratchy and prone to stains. You may be able to upgrade to a plusher, stain-resistant carpet for as little as $100 for a smaller bedroom or $150 to $200 for a larger bedroom.
  • Lighting. Builder-grade lighting fixtures aren’t always attractive. You could spend anywhere from $20 to more than $1,000 per fixture depending on what you choose.
Builder Issued Credits

Window Treatments

Some new construction homes come with basic window treatments like builder-grade blinds or curtain rods. Check your contract to see if window treatments are mentioned. Though our contract didn’t specifically state that window treatments were excluded, it also didn’t list them as included – which meant we were left to front the cost of outfitting our entire home with blinds and shades.

Window treatments range in price. Some popular options include:

  • Vinyl Blinds. Basic vinyl blinds cost as little as $30 to $50 for an average-sized window.
  • Cordless Blinds. Cordless blinds are a popular choice for children’s rooms because they’re considered safer than their cord-laden counterparts. However, they can easily cost $100 per average-sized window.
  • Blackout Cellular Shades. Blackout cellular shades do a great job at blocking sunlight, which is why they’re becoming more common. But at $120 to $150 per average-sized window, they’re not cheap.

If your home features large, oversized windows, you’ll almost certainly need custom blinds or shades, which adds to your cost. However, you can save some money by installing your window treatments yourself, or by opting for curtains instead of higher-end blinds and shades. While they don’t offer the same degree of coverage, you can get away with spending as little as $20 to $40 on curtains, plus another $20 for a rod. Though the cost is comparable to that of basic blinds, curtains tend to offer more in terms of aesthetics.

If you don’t have room in your budget for quality window treatments up front, you can purchase temporary paper shades at $5 apiece to tide yourself over until your budget does have room. Unlike flooring or countertops, which will cost you more money to upgrade in the future, you’ll pay approximately the same price to have blinds installed during the construction process as you will a year or two after you’ve closed on your home.


Many builders’ contracts call for all walls to be painted “Ceiling White” because it’s inexpensive to purchase and easy to apply. If you’d rather not limit yourself to stark white walls, expect to pay extra not just for color, but for additional labor.

Painting in color is a more time-intensive prospect than simply slapping on a white coat of paint. Your painter needs to work more precisely to provide you with even lines where the paint meets your ceiling and baseboards, and to avoid streaking.

Our builder quoted us an additional $150 per bedroom to have our walls painted in color, plus $200 for the master bedroom. We also paid $250 to have our two-story family room painted, and another $150 each for our dining room and kitchen. Of course, none of that included the actual cost of the paint, which came to almost $500 to cover approximately half the square footage in our 2,800-square-foot home.

A gallon of paint typically costs anywhere from $20 to $50 depending on the type you choose. Expect to hit the top end of that range, or possibly more, if you opt for any of the following:

  • Washable paint, which some recommend for kitchens, since food can splatter onto walls
  • Low-VOC paint, which some prefer for children’s bedrooms because of the low level of toxic emissions released
  • Custom colors

You can save money by painting yourself, but your builder may not allow you to do so during the construction process. The downside to waiting until you’ve moved in is that you’ll risk staining your floors and furniture. Plus, you’ll have to deal with wet walls and potential odors.


Many new construction contracts call for builder-grade appliances, such as a basic fridge, oven, and stove. Many exclude dishwashers, and some exclude washers and dryers. In fact, we paid $1,600 out of pocket for a washer and dryer because our builder wasn’t contractually obligated to provide them.

Don’t be surprised if your contract does not include certain essential appliances, or if your builder’s appliances don’t meet your needs. You always have the option to upgrade your appliances for ones that are larger or more energy-efficient. Of course, it will cost you.

The cost of upgraded appliances varies depending on the models you choose. For example, a refrigerator can cost anywhere from $800 to well over $5,000. Before you decide to upgrade, consult your contract to see what type of credit your builder offers for each item in question. You may be unpleasantly surprised to learn that although you can’t find a $400 fridge at your local appliance store, that’s all your builder will refund you should you choose to purchase your own.


The kitchen is one area of your home that may be worth the upgrades. Many realtors agree that if you invest in your kitchen, you’ll see that money back when the time comes to sell. Common kitchen upgrades include stainless steel appliances and stone countertops.

When deciding whether you need to sink extra money into your kitchen appliances, consider factors such as size, features, and energy efficiency. We opted to upgrade all of our kitchen appliances, as the builder’s models all lacked in one way or another. For example, the refrigerator was too small for our needs, and because we’re both avid cooks, we paid extra for a double oven and five-burner stove. We also upgraded to a larger sink.

When evaluating your appliances, be sure to consider their functional details in addition to what they look like. For example, we purchased our own faucet for our sink, as the one the builder was willing to supply didn’t offer a spray feature.

Finally, examine what is and isn’t offered by your builder. A dishwasher isn’t always standard in new construction contracts, and garbage disposals are rarely included. You can find a garbage disposal unit for as little as $150, but we paid $200 for a low-noise model that came with an extended warranty.

Common Kitchen Upgrades


Depending on your contract, your bathrooms may be outfitted with prefabricated showers and tubs, standard sinks, and builder-grade toilets. Many bathroom features can be upgraded for an additional fee.

However, your contract may not include certain items you’d expect to find in your bathrooms, such as:

  • Shower Curtain Rods. We paid about $15 to $20 for each
  • Towel Hooks. These cost about $10 apiece
  • Toilet Paper Holders. We got these on sale for about $6 each
  • Mirrors. We paid roughly $50 to $60 per mirror, but while shopping, we came across other models that topped the $200 mark

All of these items are fairly easy to install. We did the work ourselves to avoid paying $50 per bathroom to have it done for us.


Some contracts include specific details on what the bedrooms will entail. It’s common practice to indicate what type of flooring will be provided for the bedrooms (typically carpet), though other features, such as bedroom wiring, may not be spelled out in writing.

When reviewing your contract, be sure to understand what you’ll be getting in terms of:

  • Flooring
  • Wiring
  • Phone, cable, and Internet accessibility
  • Lighting and related accessories
  • Ceiling fans

Although some builders do include bedroom phone and cable hookups in their contracts, ours did not – our contract simply called for “basic” bedroom wiring to allow for lighting and a ceiling fan. Our builder quoted us $100 per room to provide telephone jacks and additional wiring to allow for Internet and cable, but because my husband was able to do this himself, we wound up spending less than $100 total.

We also discovered that we’d need to buy our own light switch plates. Although these only cost $3 to $8 apiece, we were irked to have to spend money on something we assumed was a given.

Finally, we had to purchase ceiling fans for each of our bedrooms, as they were not included in the builder’s package. A small, no-frills ceiling fan costs $50 to $80, and we bought basic units for three of our four bedrooms. Our master bedroom, however, required a large-sized fan that set us back $180, though the models we saw ranged from $150 to $300.

In addition to the cost of the fans themselves, we paid $200 to have all four installed. Thankfully, the cost of the fan wiring was covered as part of our purchase price – had that not been the case, we would’ve been looking at more than double. Although my husband is fairly handy, ceiling fan installation and wiring is a job best left to an electrician or skilled contractor.

Family Room

Your contract may not be very specific when it comes to your family room, but at the very least, it should indicate:

  • The type of flooring to be installed
  • Whether lighting is included (believe it or not, it’s not always standard)
  • Whether the room will come with a fireplace, and if so, whether the fireplace is wood-burning or gas

If your contract covers a fireplace, check to see if a mantle is actually included. Our family room came with a cozy gas fireplace, but it was only after we moved in that we realized it didn’t come with a mantle. We found models ranging from $100 to more than $1,000 and opted for a lower-end mantle that cost about $120. We painted and installed it ourselves to keep the expense to a minimum.


Many contracts spell out the number of closets to be built, but they don’t always specify which features the closets will contain. Check your contract for details on the type of shelving or closet organization systems you’ll get, as well as the type of lighting included. Though smaller closets often don’t come with lighting, it’s common for builders to provide a light source for any unit that’s large enough to be a walk-in.

Closet space was one of the things that sold us on our house in the first place. Our contract called for a massive walk-in master closet, generous bedroom closets, an oversized walk-in pantry, and several hall and linen closets. However, once we moved in, we realized that our pantry did not come with shelving, and that our master closet featured a single shelf for all of our clothing, shoes, and accessories. We wound up spending nearly $250 on pantry and hall closet shelving, which we installed ourselves, and another $200 on closet organizers for our master. Had we paid for installation, we would’ve spent an additional $100 to $200.

Home Exterior Features


When it comes to new construction, it’s not just the inside of your home you have to worry about. Your contract may exclude a number of exterior features as well, such as:

  • A Deck or Patio. Most new construction contracts don’t include decks or high-end patios. We knew that building a deck off our kitchen would cost extra, but we were surprised to learn that our contract didn’t even call for a basic concrete patio or pad. All it specified was “basic exterior finishing,” and we were foolish enough to not dig deeper before signing. Decks and patios run the gamut from several thousand to tens of thousands of dollars depending on the features and materials at hand.
  • Landscaping. New construction contracts don’t always specify landscaping details. Check your contract to see whether your builder is required to put down grass, plant trees, or provide shrubbery. We didn’t expect our backyard to feature rock gardens and exotic plant life, but we were shocked to learn that our builders were not even obligated to supply us with grass. Again, this was a situation where the contract didn’t specifically state whether it would be included, and so the omission worked in the builder’s favor. If grass isn’t included in your contract, you’ll need to choose between seed and sod. Seed costs as little as $20 to $25 per 1,000 square feet, whereas sod costs $500 to $700 per 1,000 square feet. With sod you get an instant lawn, whereas seed takes time to cultivate and grow.
  • Sprinklers. Sprinkler systems often aren’t included in new construction contracts. A sprinkler system costs anywhere from $2,000 to $5,000 or more depending on the size of your property and the number of zones and features your irrigation system sports. If your property isn’t that large, you can save money by watering manually with an extended hose. However, if you have a sizable lot, hosing down your grass on a regular basis may not be a realistic option.
  • Mailbox. You’d think that a mailbox would be a standard feature of any new home, but many new construction contracts don’t include them. It wasn’t until we actually moved into our new house that we realized it didn’t come with a mailbox. A basic mailbox costs as little as $20 to $25, but you could spend upward of $200 for a larger, more ornate model.
  • Fence. Like decks and sprinklers, new construction contracts often don’t include fencing. A wood fence costs about $20 to $30 per linear foot, whereas vinyl fencing typically costs $25 to $35 per linear foot. To save on fencing costs, see if your neighbors are interested in having their properties fenced in as well. If so, you can split the cost of your common fence lines.

Finished Basement

If your new home has a basement, don’t be surprised to find yourself on the hook for the costs required to finish it. Many new construction homes do not include the actual finishing of the basement; others come with partially finished spaces with walls and wiring, but no heat or flooring. Your contract should spell out, in detail, exactly what work your builder is required to perform.

Hiring a contractor to finish your basement can increase your overall cost exponentially. Some companies offer a basic basement finishing package that costs around $10,000 for approximately 800 square feet of space. Expect to pay more if you want a bathroom, wet bar, kitchenette, or home theater room.

To save money, you can opt for a basic finishing package, which gives you walls (white, of course), wiring, flooring, and heat and/or air conditioning, if needed. You can also try to tackle the job yourself if you’re handy, in which case you’ll pay for material costs, but not labor. Keep in mind that finishing a basement can take anywhere from several days to several weeks depending on the specifics of the job, so if you go the DIY route, don’t be surprised if the project drags out.


In many areas you don’t need a permit to upgrade your lighting or flooring. But if you’re finishing your basement, building a deck, or installing a fence, there’s a good chance you’ll need a permit from your city or township.

Permit costs vary by region. Some towns charge a set fee, while others charge based on the estimated cost or value of the project. If your builder is doing extra work on top of what’s called for in your contract, he will likely need to secure extra permits, which means the cost of obtaining them will probably be passed on to you.

Additional Miscellaneous Costs

Every new construction contract is different, so some may include features that others do not. The fact that these items weren’t included in the price of our house really caught us off-guard:

  • Front Door Lock. Our front door originally came with a poor, basic lock. We had no choice but to purchase our own lock, opting for a key-less electronic model that cost $100. You can find a quality door lock for as little as $50 or as much as $200. If you need to a hire a locksmith to install it, expect to shell out another $100 to $200.
  • Garage Door Opener. Unless you’re willing to crank open your garage by hand on a daily basis, expect to pay for a garage door opener if your contract doesn’t include one. A garage door opener costs between $150 to $200, and contractors generally charge $100 to $200 for installation. If you have a two-car garage, double that figure.

Though you can save money by installing your garage door opener yourself, keep in mind that it could be dangerous work. In an effort to cut costs, my husband insisted on installing ours on his own and wound up injuring himself in the process. Instead of paying a contractor $100 to install it, we wound up with a $100 ER copay.

Escalation Clause

Before signing your contract, check to see if it has an escalation clause. Also known as a “material cost increase clause” or “material price escalation,” an escalation clause allows your builder to pass additional construction costs on to you, the buyer, up to a specified amount.

Our contract initially included a 10% escalation clause, which would’ve allowed our builder to charge us up to 10% of our original purchase price for unanticipated labor and materials costs. Thankfully, we managed to get it removed before signing, but our friends who bought new construction weren’t as savvy and wound up paying an additional $40,000 for their home.

Excalation Clause Cost

Final Word

While my husband and I don’t necessarily regret buying new construction, the process of getting our home built was rather harrowing on many levels. From permit issues to ongoing delays, every week seemed to bring about a new challenge and an added expense. Now that we’re well past that period, we can look back on all the problems we faced and laugh. And while it is nice to have my oversized bathtub and customized kitchen, I don’t know that I’d be willing to do it again.

Do you know of any other unanticipated costs that can arise during new home construction?


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Maurie Backman is an experienced writer and editor based in Central NJ who enjoys blogging about everything from parenting to money management and investing. She spends much of her time chasing after her children and chipping away at her never-ending piles of laundry. She also bakes way too often.