Buying a newly built home in Austin can feel exciting at first. Everything is brand new, the floor plans look perfect, and the incentives can be tempting. But once the builder contract shows up, many buyers realize this is not the same process as purchasing a resale home.

Builder contracts in Texas are very different from the standard resale contracts most buyers are familiar with. They are written by the builder’s attorneys, designed to protect the builder, and often leave little room for negotiation unless you understand what you are reading.

We spend a lot of time helping buyers understand builder contracts before they sign anything. When buyers know what to expect upfront, it prevents frustration, unexpected costs, and stressful surprises later in the process.

This guide breaks down what you should know about builder contracts in Texas, especially if you are buying new construction in the Austin area.

Key Takeaways

• Builder contracts are not the same as Texas resale contracts and heavily favor the builder

• Timelines, deposits, and completion dates are often flexible for the builder, not the buyer

• Warranties sound comprehensive but usually come with important limitations

• Buyers often have less leverage after signing than they realize

• Understanding the contract before signing helps protect expectations, finances, and peace of mind

Builder Contracts Are Written to Protect the Builder

One of the most important things to understand about builder contracts in Texas is this: they are not neutral documents.

Unlike resale transactions that typically use standardized Texas Real Estate Commission contracts, builder contracts are custom-written by the builder’s legal team. Their primary goal is to reduce the builder’s risk, not to balance the interests of both parties.

This does not mean builders are doing anything unethical. It simply means buyers need to approach these contracts with eyes wide open.

Builder contracts often:

• Limit the buyer’s ability to cancel

• Give the builder broad control over timelines

• Restrict buyer remedies if delays or issues occur

• Favor the builder in dispute resolution

We make sure buyers understand that signing a builder contract is closer to entering a business agreement than submitting a typical home purchase offer.

Timelines Are Estimates, Not Guarantees

One of the most common misunderstandings buyers have with new construction contracts is around closing dates.

Builder contracts usually include an estimated completion date, not a guaranteed one. In many cases, the builder is allowed to extend the timeline for reasons such as weather, labor shortages, material delays, or other factors defined broadly in the contract.

This matters because:

• Rate locks can expire

• Lease end dates may no longer align

• Moving plans can change unexpectedly. 

Some contracts allow the builder to delay completion for months without penalty. Meanwhile, buyers often have strict deadlines and limited options if delays occur.

We walk buyers through the timeline language line by line so they understand what flexibility exists, who benefits from it, and how to plan accordingly.

Deposits Are Often Non-Refundable

Builder deposits are very different from option fees and earnest money on resale homes.

In many Texas builder contracts:

• Deposits are larger than typical earnest money

• Deposits may become non-refundable shortly after signing

• Refunds are often limited or unavailable if the buyer cancels

Buyers sometimes assume they can walk away like they could on a resale purchase. That assumption can be costly.

We help buyers understand:

• When deposits become non-refundable

• What events allow refunds, if any

• How upgrades and design selections affect refundability

Knowing this before signing helps buyers make informed decisions instead of emotional ones.

Change Orders and Design Selections Matter More Than You Think

Design centers can be fun, but they are also legally binding parts of the contract process.

Once selections are made:

• Changes may not be allowed

• Costs can increase quickly

• Refunds on upgrades are often restricted

Builder contracts usually give the builder discretion over available materials and substitutions. If a specific product becomes unavailable, the builder may substitute something similar without buyer approval.

We advise buyers to:

• Read upgrade terms carefully

• Understand pricing escalations

• Avoid assumptions about “minor changes later”

What feels flexible at the design stage often becomes fixed once construction begins.

Warranties Sound Strong, but Have Limits

Builders often highlight warranties as a major benefit of buying new construction. While warranties are valuable, they are not unlimited.

Most Texas builder warranties include:

• One year for workmanship and materials

• Two years for mechanical systems

• Ten years for structural components

However, warranties often:

• Exclude cosmetic issues

• Require strict reporting timelines

• Shift responsibility to third-party providers

Missed deadlines or improper documentation can void coverage.

We make sure buyers understand:

• What is actually covered

• How to submit warranty claims

• What is excluded from protection

A warranty is only useful if you know how to use it correctly.

Inspections Still Matter on New Construction

A common misconception is that new homes do not need inspections. In reality, inspections are just as important, if not more so.

Builder contracts often limit:

• The timing of inspections

• Who can perform them

• What happens if issues are found

We encourage buyers to schedule inspections at key stages, not just at final walkthrough. Catching issues early gives buyers more leverage than discovering problems after closing.

Understanding inspection rights before signing ensures buyers can protect themselves throughout the build.

Limited Negotiation Does Not Mean No Strategy

It is true that builders do not negotiate the same way resale sellers do. However, that does not mean buyers have no leverage.

In many cases, flexibility exists around:

• Closing cost credits

• Upgrade incentives

• Lot premiums

• Rate buy-downs

The key is knowing where builders are most willing to move and where they are not.

We help buyers approach builder negotiations strategically, not emotionally, so they maximize value without jeopardizing the deal.

Why Knowledge Prevents Frustration Later

Most issues buyers face with new construction are not surprises to the builder. They are surprises to the buyer.

When buyers fully understand the contract:

• Expectations are realistic

• Delays feel manageable, not shocking

• Financial planning stays intact

Our role is to translate legal language into practical understanding so buyers feel confident, not overwhelmed.

A builder contract should never be signed quickly or casually. Taking the time to understand it upfront saves months of stress later.