One of the biggest draws of buying a new construction home is the fresh start. Everything looks pristine, the paint is barely dry, and you get to be the first family to create memories in each room. But amid the excitement of choosing cabinet finishes and envisioning your future backyard, there can be hidden costs that don’t always show up on the brochure.
In this guide, we’ll walk through several overlooked expenses commonly associated with new construction. From those upgrade fees that can creep up to the landscaping and HOA dues, these details matter for both your budget and your peace of mind. With careful planning, you can keep your finances intact while still landing that dream home you’ve been picturing.
1. The Upgrade Fees That Add Up
Why This Cost Flies Under the Radar
Builder base prices typically reflect a “standard” package. That base price may look appealing—until you realize the model home you toured is filled with premium features. Suddenly, the kitchen in the sales brochure doesn’t match what you’d actually get unless you pay for additional perks.
Common Examples
Quartz or Granite Countertops: The basic package might include laminate, so upgrading to a more durable surface can cost thousands.
Hardwood or Luxury Vinyl Flooring: Basic carpeting may be standard, but if you want the gleam of hardwood floors, that’s extra.
Lighting and Fixtures: Premium lighting fixtures can make a space pop, but they often carry a higher price tag.
Bathroom Upgrades: A glass shower enclosure, deep soaking tub, or advanced shower system might not be included in the base plan.
How to Plan Ahead
Ask for a detailed list of what’s truly included in the standard package. Then, clarify what each upgrade costs so you can decide which ones are worth splurging on. Sometimes, it may be cheaper to handle certain improvements yourself after move-in if you know a reliable contractor or if you’re handy enough to install new light fixtures over a weekend.
2. Premium Lot Fees
What Are They?
In many new developments, not all plots of land are created equal. A corner lot might offer more space or a more secluded feel. A lot near a greenbelt could provide a scenic view. Because of these perks, builders often charge more for premium lots.
Why It Matters
It can be tempting to go for that cul-de-sac location or the spot with the scenic overlook, but that premium can range from a few thousand dollars to well into five-figure territory. If you’re aiming to keep monthly costs manageable, a pricier lot could push your mortgage into uncomfortable territory.
How to Decide If It’s Worth It
Consider how you’ll use your outdoor space. If you see yourself hosting big family gatherings or simply love having fewer neighbors, a larger or more private lot might be worth the extra money. However, if you’re likely to be traveling or working long hours, you may not fully appreciate that extra acreage. Weigh the emotional benefit against the financial impact.
3. Homeowners Association (HOA) Dues
Where Does This Expense Come From?
Most new developments feature some level of homeowner’s association. The HOA maintains shared areas, upholds community standards, and may offer amenities like a pool, gym, or playground. But those perks usually come with monthly or annual dues.
The Numbers Can Vary
HOA fees can vary wildly based on a variety of factors. In more upscale developments with golf courses or elaborate amenities, the fees can climb to several hundred dollars per month. Over years of homeownership, that recurring cost adds up.
What to Look For in the Fine Print
Before signing on, request the HOA’s budget and governing documents. Ask how often dues increase, what they cover, and whether any special assessments have been levied in the past. A seemingly low fee might jump once more homes are built or once certain maintenance costs kick in. If you expect to stay long-term, it’s best to anticipate potential hikes in dues.
4. Landscaping Costs
It’s More Than Just Throwing Down Sod
The builder’s package might mention basic front-yard landscaping, but that could mean different things. In some developments, you’ll get a small patch of grass, a couple of shrubs, and that’s it. Or maybe they only grade the yard and expect you to handle the rest.
Potential Hidden Costs
Irrigation Systems: An automatic sprinkler system can save time and water but costs extra if not included.
Fencing: Many new communities leave fencing up to the homeowner, which can be pricey depending on materials and property size.
Backyard Finishing: If the builder only landscapes the front yard, you might be left with a bare patch of dirt in the back.
Planting the Seed Early
Ask for a breakdown of what’s included in both front and back landscaping. Do some research on local climate conditions to pick the right grass or shrubs if you need to handle it yourself. The last thing you want is to spend thousands on greenery that won’t thrive in your region.
5. Utility Hookups and Connection Fees
Why They May Surprise You
When you buy in a well-established neighborhood, utilities like water, gas, and electricity are usually already connected. In a new construction setting, hooking these up might require additional fees, especially if the development is still in progress.
Possible Extra Steps
Meter Installation: Some builders factor in the cost of gas and electrical meters, while others might not.
Water and Sewer Connection: Tying into the city’s supply sometimes includes a connection charge. In rural areas, you might need a well or septic system with its own set of costs.
Permits: Certain regions require additional permits or inspections for utility hookups, and those fees can pop up unexpectedly.
Making Sure You’re Not Left in the Dark
Speak with both the builder and local utility companies. Understand who’s responsible for each piece of the puzzle. If something doesn’t come standard (like a gas line for your future outdoor grill), it might be wise to incorporate that installation now – rather than tear up your yard later.
6. Those “Extras” You Don’t Initially Think Of (Window Treatments, Lighting, Etc.)
Where Hidden Costs Love to Lurk
When you move in, you might realize the beautiful, airy model home showcased custom blinds or upgraded lighting that was never part of the base package. Standard new-construction homes may not include window treatments, overhead lighting in every room, or all the closet shelving you need.
Some Overlooked Essentials
Window Coverings: Blinds or curtains can easily cost a few thousand dollars if you have many windows.
Light Fixtures: The house might come with the standard “builder-grade” bulbs. If you want something more stylish, budget for replacements.
Bathroom Accessories: Items like towel racks, shower rods, or additional shelving might be missing.
Tallying Up the Basics
It’s helpful to do a walkthrough of a nearly finished unit, if possible. Notice which fixtures and features are included versus what you’ll have to buy yourself. Create a small budget buffer for these finishing touches; they can total more than you expect, especially if your taste leans toward high-end design.
7. Appliance Packages: Not Always Included
Wait, Isn’t There Always a Stove?
Not necessarily. Some builders include standard kitchen appliances, such as a basic dishwasher and stove, but you might have to purchase a refrigerator, washer, and dryer. Or, if you want upgraded appliances – like a built-in double oven or a stainless-steel fridge – that often comes with an upcharge.
What to Look Out For
Appliance Allowance: Some contracts mention an allowance that may or may not cover the cost of the items you truly want.
Delivery and Installation Fees: Even if the appliances are included, the builder might charge for hooking them up properly.
Locking It Down
Ask your sales representative or builder exactly which appliances come standard, plus any associated costs. If the included models aren’t to your liking, it might be more affordable to install your dream refrigerator or washer after closing. On the other hand, if you’re not comfortable dealing with deliveries and installations, paying for upgrades through the builder might be simpler – just keep an eye on the price tag.
8. Extended Warranties and Service Plans
Coverage for Peace of Mind
Most new homes come with a limited builder warranty for a certain time frame, but that doesn’t always extend to every system or upgrade. Extended warranties can cover structural or mechanical issues beyond the initial builder’s coverage.
Potential Gaps
Home Warranty Plans: Some builders partner with third-party warranty companies, offering coverage for HVAC, plumbing, or electrical components. But it might cost extra.
Extended Appliance Warranties: If you’re upgrading to top-of-the-line appliances, you might be tempted to get an extended warranty for added reassurance.
Deciding If It’s Worth It
If you’re risk-averse and want someone else to pay for repairs if the A/C goes out after year two, an extended warranty might be beneficial. However, the monthly or yearly fees can add up. Weigh your willingness to handle minor issues on your own versus the comfort of having an extended safety net.
9. Closing Costs and Builder Contributions
Not Always as Advertised
Builders sometimes promote closing cost assistance, but that doesn’t necessarily mean they cover everything. Standard closing expenses can include loan origination fees, title insurance, escrow charges, and more. If the builder’s assistance only covers some of these items, you’ll still be responsible for the rest.
Where Surprises Arise
Loan Points: If you want to buy down your interest rate, that’s an additional expense.
Title and Recording Fees: In some areas, these can be sizable, so you’ll want clarity on whether the builder is paying a portion or none at all.
Prepaid Taxes and Insurance: You might need to place a few months’ worth of property taxes and homeowner’s insurance into escrow at closing, which can add up quickly.
Reading the Fine Print
Ask for a breakdown of each cost. Don’t just accept a lump-sum figure. If the builder’s contribution covers only certain items, you’ll want to budget for whatever remains.
10. Delays, Construction Surprises, and the Contingency Fund
Nobody Likes a Setback
New construction doesn’t always stick to the original timeline. Weather, supply chain interruptions, or permit backlogs can push your closing date further than expected. If you’ve already planned your move-out date from your current place or locked in a mortgage rate, these hiccups can cost you real money – like paying for short-term housing or rate-lock extensions.
Why It Matters
Temporary Housing: If your home’s not ready when promised, you might need an apartment or Airbnb for a few weeks. That’s an additional expense.
Storage Fees: Delays may force you to store furniture and belongings, at least until you can move in.
Rate-Lock Extensions: If your mortgage lender only guarantees a specific rate for 60 days and your home finishes in 90, you might pay a fee to keep that rate, or risk it rising.
Plan for the Unknown
Have a contingency fund set aside, ideally covering a few months’ worth of rent and other essentials. That way, you’re not thrown into a panic if the timeline shifts. And if everything goes according to plan, you’ll have a bit of extra savings left over for furnishing your shiny new place.
Conclusion
Buying new construction can be a wonderful experience. You get to pick features that match your style, move into a spotless interior, and enjoy the feeling of a fresh start. But along with that bright, modern space can come extra fees: from custom upgrades and premium lot charges to unanticipated HOA dues and landscaping expenses. Add in possible delays, and it’s easy to see how total costs can creep above your initial budget if you don’t pay attention.
The key is to go in with eyes open. Ask thorough questions, do your homework, and keep a backup plan (and budget) ready for the unplanned expenses that sometimes appear. If you anticipate these potential pitfalls, you’ll be far less likely to experience sticker shock and more likely to enjoy the thrill of owning a brand-new home.
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Michael Letendre
Michael Letendre is a writer for NewHomeSource and Builder Magazine.