Thinking about a new construction home in Auburn but not sure what the builder contract really says? You’re not alone. Builder agreements are different from standard resale contracts and can affect your price, timeline, and options. In this guide, you’ll learn the key clauses to watch, how deposits and change orders work, and where a trusted agent protects your interests from contract to closing. Let’s dive in.
How Auburn’s market shapes contracts
Auburn’s housing demand is influenced by Auburn University and related employers, which creates steady activity and some seasonality. That means builders may adjust incentives, inventory of spec homes, and completion timelines based on the academic calendar and local demand. Understanding that context helps you time your purchase and negotiate.
Local permitting and inspections in Auburn and Lee County can affect how quickly a home is finished. Permit turnaround, inspection scheduling, and utility connections impact completion dates, so you should ask the builder and local building departments about typical timelines before you lock in dates.
In Alabama, builders and contractors must be properly licensed. You should verify licensing and request proof of insurance. It also helps to work with lenders, inspectors, and real estate attorneys who are experienced with new construction in the area.
Key clauses to understand
Purchase price and allocation
Your contract should clearly break down the total price into base home, lot premium, upgrades, and allowances. Vague allowances can cause appraisal and loan issues later. Ask for a detailed line‑item list so your lender’s appraisal and your expectations match the contract.
Deposits, earnest money, and escrow
Builders often use a reservation deposit and then a larger earnest or contract deposit. On pre‑sales, deposits can be higher, and parts may become nonrefundable after certain milestones. Clarify refund conditions in writing, including what happens if financing falls through, a Certificate of Occupancy is not obtained, or the builder defaults. When possible, request that deposits be held in a neutral third‑party escrow.
Lot reservation and premiums
If you’re paying a lot premium, the contract should list the exact lot, any setbacks, easements, and location‑based price adders. Confirm the legal description and that the premium is reflected in the financed amount if you are using a mortgage.
Construction schedule, completion, and delays
Many contracts list estimated start dates, milestones, and a projected closing date. Watch for very broad delay language that gives the builder the ability to extend without a remedy for you. Aim for target dates, a clear definition of “substantial completion,” and a requirement for a Certificate of Occupancy before closing.
Financing and appraisal contingencies
Some builder contracts are not contingent on financing or appraisal. If your loan is denied or the appraisal comes in low, you could be required to close or forfeit deposits. Push for financing and appraisal contingencies with realistic cure periods, and make sure you understand all deadlines.
Inspections and warranty walk‑throughs
Builders may allow independent inspections, but access can be limited to certain stages and require licensed inspectors. Ensure your contract outlines inspection rights and schedules, plus a final walk‑through and punch list process before closing. Set expectations for how quickly punch‑list items will be completed.
Allowances, selections, and upgrade pricing
Allowances are preset dollar amounts for finishes like flooring or cabinets. Low allowances can shift costs to you once you make selections. Lock down selection deadlines, get written quotes for upgrades, and cap costs where possible so you can stay on budget.
Change orders and extra work
Changes after signing the contract need a clear process. Require written estimates, your approval before work starts, and a note on how the change affects the completion date. Confirm when and how you pay for extras and whether your lender will finance them.
Warranties and post‑closing service
Many builders follow a 1‑2‑10 structure: 1 year for workmanship, 2 years for systems, and 10 years for structural components. Terms vary, so confirm the coverage, response times, and whether the warranty is backed by a third party. Keep records of all requests and repairs.
Title, HOA, and community restrictions
Review HOA covenants, design guidelines, fees, and any developer control periods before you finalize the contract. Ask about planned amenities and potential special assessments that could affect your use and monthly costs.
Mechanic’s liens and lien waivers
Subcontractors or suppliers can file liens if they are not paid. To reduce risk, require final unconditional lien waivers and a lien release affidavit from the builder’s subs at closing. Your lender or closing agent can help collect these.
Risk allocation, insurance, and casualty
Clarify who is responsible if the property is damaged during construction, and what happens if a major event delays or damages the build. Your contract should outline whether the builder must repair or rebuild, and when you can terminate with a refund.
Dispute resolution and attorney fees
Many builder contracts use mandatory arbitration with limits on discovery or certain remedies. Understand what you’re agreeing to, including time limits for filing claims and any fee‑shifting provisions. If needed, consult an Alabama real estate attorney before signing.
Timelines, deposits, and change orders in Auburn
Typical timelines
Spec homes are often close to move‑in ready and can close in about 30 to 90 days if substantially complete. For pre‑sales, common ranges are roughly 4 to 9 months from the start of construction to completion for a typical single‑family home. Actual time varies with permitting, inspections, weather, material availability, and builder capacity.
Deposit practices and refundability
- Reservation deposit: Often a modest amount to hold a lot or model, sometimes refundable.
- Earnest or contract deposit: Usually larger for pre‑sales, smaller for spec homes.
- Refunds: Contracts differ. Common refund triggers include financing denial if you have a financing contingency, failure to obtain a Certificate of Occupancy, or builder default. Parts of the deposit may become nonrefundable after milestones like framing or final selections. Confirm the exact triggers in writing.
Change order mechanics and financing
Change orders typically follow a simple sequence: you request a change, the builder provides a written quote and schedule impact, you approve in writing, and you pay any required deposit. Some contracts allow builders to delay completion because of changes without offering a remedy to you. If you want the cost financed, ask your lender upfront whether they will allow the loan amount to increase or if a re‑appraisal is required. If not, you may need to pay for upgrades outside the transaction.
Spec vs. pre‑sale in Auburn
What each option means
- Spec home: Built without a specific buyer in mind. It is often partially or fully complete and offers a quicker path to closing with fewer decisions to make.
- Pre‑sale home: You sign early and select finishes within the builder’s option set. You get more customization, but you wait longer and manage more decisions.
Pros and cons
- Spec pros: Faster move‑in, easier to visualize the finished product, fewer selections.
- Spec cons: Limited customization and sometimes less room to negotiate if the home is in demand.
- Pre‑sale pros: More control over finishes, the ability to choose a lot, and the opportunity to secure desired options at the outset.
- Pre‑sale cons: Longer timelines, potential for change order costs, and more construction‑related uncertainty.
Negotiation levers
- For spec homes: Focus on price, closing credits, quick‑close incentives, and any immediate repair items. Ask about builder‑paid closing costs.
- For pre‑sales: Target allowances, included upgrade packages, financing incentives such as rate buydowns, lot premium adjustments, and enhanced warranty terms. You can also ask for defined selection windows and written caps on customer changes.
Appraisals and financing
Pre‑sale homes can challenge appraisals if upgrades are not finalized. Make sure allowances and final pricing for finishes are documented for your lender. Some buyers consider construction‑to‑permanent loans for projects with more buyer control, while many production builders prefer you use their preferred lender incentives. Compare options and confirm how changes will be handled by your lender.
Where your agent adds value
A skilled agent brings structure and accountability to a complex process. Here’s how your advocate can help you protect your time, money, and peace of mind:
- Contract review: Flag ambiguous language, nonrefundable deposit triggers, arbitration requirements, and vague delay provisions.
- Consumer protections: Negotiate financing and appraisal contingencies, inspection access, clear allowance schedules, and lien waiver requirements at closing.
- Coordination: Keep you, the lender, builder, title/closing agent, and inspector aligned on deadlines and funding for upgrades.
- Market leverage: Use local comps and current inventory to negotiate incentives, lot premiums, and selection concessions.
- Inspection support: Arrange stage inspections and confirm punch‑list items are documented with a completion timeline.
- Escrow best practices: Place earnest funds in neutral escrow and ensure refund conditions are in writing.
- Education and timing: Explain selection deadlines, payment timing, and risks related to delays, cost increases, or liens.
Practical checklist
Pre‑contract due diligence
- Verify builder license, insurance, and references.
- Review sample contracts, warranty language, and any available complaint history.
- Get lender preapproval and confirm experience with new construction.
- Review HOA/CC&Rs, community guidelines, and the lot’s legal description.
- Ask for a sample closing statement and typical out‑of‑pocket costs.
Contract stage: put these in writing
- Exact inclusions, allowances, and dollar amounts.
- Clear deposit refund conditions and escrow holder.
- Defined completion criteria with a Certificate of Occupancy requirement.
- Inspection rights, schedule, and punch‑list timelines.
- Change order approval steps, pricing, and payment timing.
- Final unconditional lien waivers and lien affidavit required at closing.
During construction
- Track milestones and keep all communications in writing.
- Schedule staged inspections and attend the final walk‑through.
- Keep a record of all change orders and receipts for extra payments.
- Notify your lender and title company of any material changes.
Pre‑closing and closing
- Complete the final walk‑through and create a detailed punch list.
- Confirm title search, insurance, and unconditional lien waivers.
- Verify warranty registration and obtain all warranty documents.
- Ensure builder obligations and repairs are documented with timelines.
Final thoughts and next steps
Builder contracts set the rules for your budget, your timeline, and your options. In Auburn and Lee County, local permitting, inspection schedules, and seasonal demand patterns all play a role in how smoothly your build goes. With the right terms in writing and a proactive plan, you can move into a new home with confidence.
If you want a calm, coordinated path from lot selection to punch‑list, we’re here to help you compare spec and pre‑sale options, review the fine print, and keep every detail on track. Reach out to Margo Ladner for friendly, expert guidance on your Alabama new‑construction purchase.
FAQs
Are builder deposits refundable on Auburn new builds?
- It depends on your contract. Some reservation deposits are refundable, but many deposits become nonrefundable after milestones. Get exact refund triggers in writing.
Can I use my own home inspector during construction?
- Usually, yes. Many builders allow independent inspections at set stages with licensed inspectors. Confirm timing and access in your contract.
What happens if the appraisal is lower than my contract price?
- If there’s no appraisal contingency, you may need to pay the difference or negotiate with the builder. Ask for an appraisal contingency and clear cure period.
Who pays for change orders and upgrades?
- You do for buyer‑requested changes. Require written estimates and confirm whether your lender will finance the extra cost or if you must pay outside closing.
How long is the warranty on a new construction home?
- Many builders offer 1 year on workmanship, 2 years on systems, and 10 years on structural items, but terms vary. Verify coverage, claim steps, and response times.
