Everything You Need to Know About Buying New Construction in Colorado
Builder contracts are not written for you. The sales rep works for the builder. Here's how to protect yourself — and make the most of one of the best opportunities in today's market.
This guide covers every stage of the new construction process in Colorado — from understanding builder contracts and incentives to inspections, warranties, and your legal rights. Sourced from NAR, CAR, CREC, DMAR, and Colorado law.
Is New Construction Right for You?
New Construction vs. Resale: What Colorado Buyers Need to Understand First
New construction offers real advantages — but it also comes with risks that resale buyers never face. Know the difference before you walk into a model home.
Why Buyers Choose New Construction
Customization
Choose your floor plan, finishes, fixtures, and upgrades before a single wall goes up.
Energy Efficiency
New Colorado homes must meet 2021 IECC energy codes. DOE estimates new builds are up to 30% more efficient than older homes, saving hundreds annually on utilities.
Builder Warranties
Most Colorado builders offer 1-year workmanship, 2-year systems, and 10-year structural warranties. Under HB25-1272 (eff. Jan 1, 2026), MCIP-participating builders must provide these minimums.
Builder Incentives
In 2026, builders are actively offering rate buydowns, closing cost credits, and upgrade allowances to maintain sales momentum. (Source: LivingColoradoTeam.com, March 2026)
What Buyers Often Don't Expect
Builder Contracts Favor the Builder
Unlike the CREC-standardized resale contract, builder contracts are drafted by the builder's attorneys. They are not neutral. (Source: Geraghty Law Office, Denver)
Timeline Risk
Build timelines can shift 3–12 months. Your rate lock, lease end, and life plans must account for this.
Earnest Money Exposure
Builder EMD is typically 3–10% of purchase price — far more than the 1–3% standard on resales. Loan-out provisions are also more restrictive. (Source: Focus Brokers, Jan 2025)
No Neutral Advocate Onsite
The builder's sales rep is a skilled professional — representing the builder. You need your own agent.
Bottom line: New construction can be an excellent path to homeownership in Colorado — especially in 2026 when builder incentives are strong. But walking in without representation or preparation is one of the most expensive mistakes a buyer can make.
Why Representation Matters
"The Builder's Sales Rep Works for the Builder. You Need Someone in Your Corner."
This is the single most important thing to understand before you visit a model home. The on-site sales representative is a skilled professional — but their job is to protect the builder's interests, not yours.
Under NAR's Code of Ethics (Article 1) and Colorado's CREC licensing rules, a buyer's agent has a fiduciary duty to you — the buyer. That means loyalty, confidentiality, disclosure, obedience, reasonable care, and accounting. The builder's rep has none of those obligations to you.
Register With Your Agent First
Before you visit any model home or fill out a builder registration card, have your agent registered as your representative. Once you sign the builder's registration card without an agent listed, many builders will not allow an agent to be added later. This is a critical first step.
Request a Buyer Agency Agreement
Since August 2024, Colorado requires a signed Buyer Agency Agreement before an agent can show you any property or represent you — including new construction communities. CREC updated its Commission-approved forms effective January 1, 2026 to reflect NAR's settlement changes. Your agreement spells out services and compensation clearly. (Source: CREC; April 2026)
Have the Builder Contract Reviewed
Builder contracts are not the CREC-standardized form. They are drafted by the builder's legal team. Key clauses to scrutinize: earnest money forfeiture terms, loan contingency windows (typically only 30–45 days vs. full loan objection deadline on resales), arbitration requirements, change order pricing, and completion timeline flexibility. (Source: Geraghty Law Office; Focus Brokers)
Negotiate — Yes, You Can
Buyers often assume builder pricing is fixed. It isn't always. While builders rarely move on base price (to protect appraisals across the community), they frequently negotiate on: closing cost credits, rate buydowns, design center allowances, appliance packages, and lot premiums. Your agent knows what's negotiable and what isn't.
Your Agent Costs You Nothing Extra
In new construction, the builder typically pays the buyer's agent commission — it's already built into the builder's cost structure. You get professional representation at no additional out-of-pocket cost. Walking in without an agent doesn't save you money. It just removes your advocate.
"Walking into a builder's sales office without an agent is a lot like walking into divorce court without an attorney and expecting your former spouse's attorney to structure a fair deal for you. It simply isn't going to happen." — David Barker, DavidSellsDenver.com
Understanding Builder Contracts
7 Critical Differences Between Builder Contracts and Colorado's Standard CREC Contract
Builder contracts are legal documents drafted by the builder's attorneys. They are not the neutral, buyer-friendly CREC form you'd use in a resale. Here's what's different — and what to watch for.
1. Earnest Money Is Much Higher — and Harder to Get Back
On a resale, Colorado buyers typically put down 1–3% EMD. On new construction, builders often require 3–10% of the purchase price — plus additional deposits as you select structural upgrades and finishes. If you back out, the forfeiture terms are far more aggressive than on a CREC contract. (Source: Focus Brokers, Jan 2025)
2. Your Loan Contingency Window Is Shorter
On a CREC resale contract, buyers can exit due to loan issues all the way up to the Loan Objection Deadline — typically with no EMD loss. Builder contracts usually give you only 30–45 days to exit for loan reasons, and even then, builders may withhold a portion of your deposit. Read this clause carefully. (Source: Focus Brokers, Jan 2025)
3. Arbitration Clauses Limit Your Legal Options
Many builder contracts require binding arbitration for disputes — meaning you waive your right to a jury trial. This can limit your recourse if construction defects arise. Under Colorado HB25-1272 (eff. Jan 1, 2026), MCIP-participating builders have specific dispute resolution requirements, but non-MCIP builders may not. (Source: Colorado HB25-1272; Geraghty Law Office)
4. Change Orders Can Be Expensive and Non-Refundable
Any modification after contract signing — even minor ones — typically triggers a formal change order with a price markup. Builders often charge 10–20% above cost for change orders. Once signed, these are binding and the costs are rarely refundable if you exit the contract.
5. Completion Timelines Are Estimates, Not Guarantees
Builder contracts typically include language protecting the builder from delays due to weather, supply chain issues, labor shortages, or permitting. A home quoted at 8 months may take 12–18. Your rate lock, lease end date, and moving plans must account for this flexibility — or lack thereof.
6. The Builder's Lender May Offer Better Incentives — But Read the Fine Print
Builders often incentivize buyers to use their preferred lender with closing cost credits or rate buydowns. This can be genuinely valuable — but you are not required to use their lender. Compare the builder's lender offer against at least two outside lenders before committing. The incentive may not offset a higher rate or less favorable terms.
7. Warranty Language Varies Significantly
Not all builder warranties are equal. Under Colorado HB25-1272's MCIP (eff. Jan 1, 2026), participating builders must provide: 1-year workmanship warranty, 2-year systems warranty (plumbing, electrical, HVAC), and 6-year structural warranty. Non-MCIP builders may offer less. Get the warranty in writing and have it reviewed before signing. (Source: Colorado HB25-1272; HBA Colorado)
Jackson's Recommendation: Before signing any builder contract, have it reviewed by both your buyer's agent AND a Colorado real estate attorney. The cost of a legal review ($300–$600) is minimal compared to the risk of signing a contract you don't fully understand.
Builder Incentives Decoded
How to Evaluate Builder Incentives Without Getting Burned
In 2026, Colorado builders are competing aggressively for qualified buyers. Incentives are real — but they're structured to protect the builder's headline price. Here's how to evaluate them honestly.
Builders rarely reduce their base price — doing so would undermine appraisals across the entire community and hurt every other buyer's equity. Instead, they offer incentives that improve affordability without touching the list price. Understanding how each incentive works helps you compare apples to apples. (Source: LivingColoradoTeam.com, March 2026)
Interest Rate Buydowns
The most popular 2026 incentive. A 2-1 buydown reduces your rate by 2% in year 1 and 1% in year 2, then adjusts to the full rate. A permanent buydown lowers your rate for the life of the loan. Always calculate the total cost of the buydown vs. the monthly savings — and ask what happens if you refinance. Builder-paid buydowns can be genuinely valuable, especially if rates drop and you refinance within 2–3 years.
Closing Cost Credits
Credits applied at closing to cover loan origination fees, title, escrow, prepaid taxes, and insurance. These are real money — but they cannot exceed your actual closing costs. Coordinate with your lender early so the credit is fully utilized. Unused credits don't come back to you as cash.
Design Center Allowances & Upgrade Packages
Builders may offer $10,000–$50,000+ in design center credits or pre-selected upgrade packages. Important caveat: design center pricing is typically marked up 20–40% above what you'd pay a contractor post-close. Evaluate whether the upgrade is worth the builder's price— or whether you'd rather take a lower-cost option and upgrade yourself after closing.
Lot Premium Waivers
Premium lots (corner, cul-de-sac, backing to open space) carry added costs of $5,000–$30,000+. In slower-moving communities, builders may waive or reduce lot premiums to close deals. This is one of the most negotiable line items — and one buyers often don't think to ask about.
3–10%
Typical Builder EMD (vs. 1–3% on resales)
$10K–$50K+
Common Design Center Allowances in 2026
30%
Energy savings vs. older homes (U.S. DOE)
Jackson's Rule: Always ask the builder's sales rep: 'What is the total net cost to me after all incentives?' Then have your agent verify it. Incentives that look large on paper can be structured to benefit the builder more than you.
Inspections & Warranties
Never Skip the Inspection. Even on a Brand-New Home.
One of the most common — and costly — mistakes new construction buyers make is assuming a new home doesn't need an inspection. It does. Every time.
A new home has never been lived in, but that doesn't mean it's perfect. Construction errors, code violations, incomplete work, and defective materials are all documented in new construction inspections across Colorado. Your builder's final walkthrough is not a substitute for an independent inspection.
The Three Inspections You Should Always Get
Pre-Drywall Inspection (Phase Inspection)
Scheduled after framing, plumbing, electrical, and HVAC rough-in — but before drywall goes up. This is your only opportunity to see inside the walls. A qualified inspector can identify framing errors, improper plumbing runs, electrical issues, and HVAC duct problems that would be invisible — and expensive — to fix after drywall. This inspection is critical and often skipped by buyers who don't know to ask for it.
Final / Pre-Closing Inspection
Conducted when the home is complete but before you close. Your independent inspector (not the builder's inspector) walks the entire home. Common findings: improper grading, HVAC issues, plumbing leaks, missing insulation, window seal failures, and incomplete punch-list items. Do not close without this inspection complete and all material issues addressed or credited.
11-Month Warranty Inspection
Scheduled approximately 11 months after closing — just before your 1-year workmanship warranty expires. This is your last chance to document and submit warranty claims under the builder's 1-year coverage. Many buyers forget this inspection exists. Put it on your calendar the day you close.
Colorado Warranty Law: What You're Entitled To
1-Year Workmanship Warranty
Covers defects in materials and workmanship. Required for MCIP-participating builders under HB25-1272. Submit all claims in writing before the 1-year anniversary of closing.
2-Year Systems Warranty
Covers plumbing, electrical, HVAC, and mechanical systems. Required for MCIP-participating builders. Document any system issues with photos and written notice to the builder.
6-Year Structural Warranty (MCIP) / 10-Year (Many Builders)
Covers structural components — foundation, load-bearing walls, roof framing. Under HB25-1272, MCIP builders must provide 6-year structural coverage. Many major builders voluntarily offer 10-year structural warranties. Verify which applies to your builder before signing.
Important: Under Colorado HB25-1272 (eff. Jan 1, 2026), if your builder participates in the MCIP, you must exhaust all warranty remedies before filing a lawsuit. Document everything in writing. (Source: Colorado HB25-1272; HBA Colorado)
Sources: Colorado HB25-1272 (signed May 2025, eff. Jan 1, 2026); HBA Colorado; Geraghty Law Office
The Build Process
From Contract to Keys: The New Construction Timeline in Colorado
New construction timelines vary by builder, product type, and market conditions. Here's a realistic picture of what to expect — and where delays typically happen.
Pre-Contract: Research & Representation (Weeks 1–4)
Visit communities with your agent registered. Research the builder's reputation, warranty history, and financial stability. Review the contract with your agent and a real estate attorney before signing anything. Compare the builder's lender offer against outside lenders.
Contract Signing & Design Selections (Weeks 4–12)
Sign the builder contract and pay initial EMD (typically 3–10%). Complete structural selections (floor plan modifications, lot choice) within the builder's deadline — usually 2–4 weeks. Visit the design center for finish selections. Additional EMD deposits may be required as selections are finalized.
Permitting (Weeks 8–16)
Builder submits plans to the local municipality for building permits. In the Denver metro, permitting timelines vary significantly by jurisdiction — Aurora, Broomfield, and Castle Rock have different processing times. Delays here are common and outside the builder's control. Your timeline doesn't officially start until permits are pulled.
Site Prep & Foundation (Weeks 12–20)
Lot grading, excavation, and foundation pour. In Colorado, weather can delay this phase — especially October through April. Foundation inspections are conducted by the local building department.
Framing & Rough-In (Weeks 16–28)
Framing, roofing, and rough-in of plumbing, electrical, and HVAC. Schedule your pre-drywall inspection during this phase — after rough-in is complete but before drywall is installed. This is your most important inspection window.
Drywall, Finishes & Mechanical (Weeks 24–40)
Drywall installation, painting, cabinetry, flooring, fixtures, and appliances. Builder's quality control inspections occur throughout. This phase is where most punch-list items originate.
Final Walkthrough & Pre-Closing Inspection (Weeks 36–52+)
Builder conducts a final orientation walkthrough. You conduct your independent pre-closing inspection. All material defects should be documented and addressed — or credited — before closing. Do not close with unresolved structural or systems issues.
Closing & Post-Close (Week 40–56+)
Colorado closings typically take 30–45 days from final completion. At closing, you receive your warranty documentation, HOA documents (if applicable), and keys. Schedule your 11-month warranty inspection before the 1-year anniversary of your closing date.
Reality Check: Most Colorado builders quote 8–12 months for a spec or semi-custom home. In practice, 12–18 months is common when accounting for permitting delays, weather, and supply chain issues. Plan accordingly — especially for rate locks and lease expirations.
Financing New Construction
Financing a New Build Is Different. Here's What You Need to Know.
New construction financing has unique challenges that don't exist in resale transactions — from rate lock timing to appraisal gaps. Understanding these upfront prevents costly surprises at closing.
30–45 Days
Typical Colorado closing timeline (resale)
6–18 Months
Typical new construction build timeline
0.25–0.75%
Extended rate lock cost per 90 days (of loan amount)
Rate Lock Strategy
Standard rate locks run 30–60 days. New construction timelines run 6–18 months. You have three options: (1) Float the rate and lock closer to closing — with market risk; (2) Pay for an extended rate lock (typically 0.25–0.75% of loan amount per 90 days); (3) Use the builder's preferred lender, who may offer extended locks as part of their incentive package. Discuss all three with your lender before signing the builder contract.
Builder's Lender vs. Outside Lender
You are never required to use the builder's preferred lender. However, the builder's lender often offers competitive incentives — extended rate locks, closing cost credits, or rate buydowns — that outside lenders cannot match. The key: get a full loan estimate from both and compare total cost, not just rate. (Source: HomeLoanAdvisor.com)
Appraisal Gaps in New Construction
New construction appraisals can be challenging because comparable sales in a new community are limited. If the appraisal comes in below the contract price, you may face an appraisal gap — meaning you'd need to bring additional cash to closing or renegotiate. Discuss appraisal gap coverage with your agent before signing.
HOA & Metro District Disclosures
Many new Colorado communities are governed by Metropolitan Districts (Metro Districts) — a form of special taxing district that funds infrastructure. Metro District mill levies can add $1,500–$5,000+ annually to your property tax bill. This is separate from HOA dues. Colorado law requires builders to disclose Metro District information, but buyers often don't understand the long-term cost. Ask your agent to explain the full tax picture before you sign. (Source: CAR; CREC)
True Cost of Ownership Calculation
Base price + lot premium + structural upgrades + design center selections + closing costs + Metro District taxes + HOA dues = your true cost of ownership. Many buyers focus only on the base price and monthly payment. Your agent should help you build a complete cost picture before you fall in love with a floor plan.
Jackson's Checklist: Before signing a builder contract, confirm: (1) Your lender is aware of the build timeline; (2) You understand the rate lock strategy; (3) You've reviewed the Metro District disclosure; (4) You've calculated total cost of ownership including all taxes and fees.
Colorado Law & Your Rights
Colorado New Construction Law: What Every Buyer Must Know in 2026
Colorado has some of the most buyer-protective real estate laws in the country — but only if you know they exist and how to use them.
The Colorado Real Estate Commission (CREC), Colorado Association of Realtors (CAR), and the Colorado General Assembly have established a framework of protections for new construction buyers. Here are the most important legal provisions affecting you in 2026.
HB25-1272: The Multifamily Construction Incentive Program (MCIP)
Signed by Governor Polis on May 12, 2025. Effective January 1, 2026. Creates a voluntary opt-in program for builders of attached multifamily housing (condos, townhomes). Builders who participate must: (1) Provide a 1-2-6 warranty (1-year workmanship, 2-year systems, 6-year structural); (2) Have third-party inspections performed; (3) Record a notice of election in the property records before the property is offered for sale. In exchange, builders receive limitations on construction defect claims and a defined statute of limitations. Buyers must exhaust warranty remedies before filing suit against MCIP builders. (Source: Colorado HB25-1272; HBA Colorado; Lathrop GPM)
CREC Buyer Agency Agreement (Updated Jan 1, 2026)
Following NAR's 2024 antitrust settlement, Colorado updated its Commission-approved buyer agency forms effective January 1, 2026. Key changes: buyer's agent compensation is now negotiated directly with the buyer (not split through MLS); the agreement must be signed before an agent shows any property; compensation terms must be clearly disclosed. This applies to new construction representation as well. (Source: CREC; April 2026)
Colorado Contract to Buy and Sell (CBS) — Not Used in New Construction
Colorado's standardized CREC contract is used in virtually all resale transactions. It is NOT used in new construction — builders use their own proprietary contracts. This is a critical distinction. The CBS has buyer-protective deadlines (inspection, loan objection, title review) that builder contracts may not replicate. Buyers should understand what protections they are giving up when signing a builder contract. (Source: CREC; Geraghty Law Office)
Metro District Disclosure Requirements
Colorado law requires builders to disclose Metropolitan District information to buyers before contract signing. Metro Districts are special taxing districts that fund roads, utilities, and infrastructure in new communities. Mill levies vary widely — some exceed 100 mills, adding thousands annually to property taxes. Buyers have the right to review Metro District financial statements and service plans before signing. (Source: CAR; Colorado Division of Local Government)
Key Regulatory Bodies
CREC (Colorado Real Estate Commission) — Licenses brokers, approves contracts, enforces standards. crec.colorado.gov
CAR (Colorado Association of Realtors) — Professional standards, market data, advocacy. coloradorealtors.com
DMAR (Denver Metro Association of Realtors) — Monthly market reports, local MLS data. dmar.org
NAR (National Association of Realtors) — Code of Ethics, national standards, settlement rules. nar.realtor
Your Rights as a Colorado Buyer
Right to independent representation — You may have your own agent at any builder community.
Right to independent inspection — You may hire your own inspector at any phase of construction.
Right to lender choice — You are never required to use the builder's preferred lender.
Right to attorney review — You may have any contract reviewed by a Colorado real estate attorney before signing.
New Construction FAQs
The Questions Every New Construction Buyer in Colorado Should Ask
These are the questions most buyers don't know to ask — until it's too late. Ask them before you sign anything.
Do I need my own agent to buy new construction?
Yes. The builder's sales rep represents the builder, not you. Under NAR's Code of Ethics and CREC rules, your agent has a fiduciary duty to you. Register your agent before your first visit to any model home.
Does the builder's agent commission cost me anything?
In most cases, no. Builders typically pay the buyer's agent commission as part of their cost structure. Walking in without an agent doesn't save you money — it just removes your advocate.
Can I negotiate with a builder?
Yes — but strategically. Builders rarely reduce base price (to protect community appraisals), but frequently negotiate on closing cost credits, rate buydowns, lot premiums, design center allowances, and appliance packages. Your agent knows what's negotiable.
Do I need a home inspection on a new build?
Absolutely. Schedule a pre-drywall inspection (before drywall goes up) and a final pre-closing inspection. Also schedule an 11-month warranty inspection before your 1-year workmanship warranty expires.
What is a Metro District and how does it affect my taxes?
A Metropolitan District is a special taxing district that funds infrastructure in new communities. Mill levies can add $1,500–$5,000+ annually to your property tax bill — separate from HOA dues. Colorado law requires disclosure, but buyers must ask for and review the Metro District service plan.
Should I use the builder's preferred lender?
Compare the builder's lender offer against at least two outside lenders. Builder lenders often offer competitive incentives (rate buydowns, extended locks, closing cost credits) — but you are never required to use them. Compare total cost, not just rate.
What happens if the builder delays my closing?
Builder contracts typically protect the builder from delays due to weather, supply chain, labor, or permitting. Your rate lock, lease end, and moving plans must account for potential 3–12 month delays. Discuss timeline risk with your agent before signing.
Is my earnest money safe?
Builder EMD (3–10% of purchase price) is held differently than resale EMD. Forfeiture terms are more aggressive. Understand exactly what triggers EMD forfeiture before you sign — and what your loan contingency window is.
What is the MCIP and does it apply to my builder?
Colorado's Multifamily Construction Incentive Program (HB25-1272, eff. Jan 1, 2026) is a voluntary program for attached housing builders. If your builder participates, they must provide a 1-2-6 warranty and third-party inspections — but you must exhaust warranty remedies before suing. Ask your builder directly if they are MCIP-participating.
What should I do before visiting a model home?
(1) Contact your agent first and have them registered as your representative;
(2) Get pre-approved for financing; (3) Research the builder's reputation and warranty history;
(4) Understand your budget including Metro District taxes, HOA dues, and upgrade costs.
Ready to Get Started?
Let's Navigate New Construction Together.
You now know more about buying new construction in Colorado than most buyers ever learn.
Whether you're just starting to explore new construction communities or you've already visited a model home, I can help you understand what you're looking at, what questions to ask, and whether it's the right move for your situation. I work with a focused number of clients at a time so I can give each one real attention.
Free Consultation
A 30-minute conversation to understand your situation, your timeline, and whether new construction makes sense for you.
Community Research
I'll research the builders, communities, and Metro Districts in your target area so you walk in informed.
Contract Review Support
Before you sign anything, I'll walk you through the builder contract and connect you with a Colorado real estate attorney if needed.
Jackson Granger, REALTOR®
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