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Common New Construction Terms

Posted by Sarah Steen on February 17, 2024
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There are a number of terms unique to the new construction process that can get confusing quickly. Below we discuss some of the most common terms you’ll see as you go through the building process. Consider this your “New Construction Glossary.”

Important Note: A real estate agent will be able to navigate this process with you. The builder’s sales person ultimately works for the builder. Relying on them would be similar to using the seller’s agent in an existing home purchase. An experienced buyer’s agent can advise you, make recommendations, and ask questions that you might not know to ask. Builders have the cost of your real estate agent built into the price of the home. Opting to build a home without a real estate agent means you are not represented, but the builder still receives that money.

Download the New Build Guide

Base Price

A builder’s standard price for a certain model. Lot price may or may not be included. Base price includes a certain number of standard features. The builder is usually very detailed on what’s included in these standards, but it is prudent to remember what is NOT included. Items often not included in base price include: lot premium, landscaping, refrigerator, air conditioner, garage door opener, etc.

PRO TIP: walk through one or more spec homes or homes under construction with your REALTOR and take notes on items that you’re not sure are included. Compare these items to your inclusion sheet and ask the sales rep about them if they are not on the sheet.

Related Reading: Where to find New Construction in Colorado Springs

Lot Premium

Most builders will provide a standard lot price into their base price and will offer lot premiums for upgraded lots. These lots could be bigger or have a more desirable location like a corner lot, cul-de-sac, or maybe a special view.

Related Reading: Tips for Choosing a Lot


  • Professional Incentives: specials for military, first responders, health care workers, teachers, etc.
  • Lender Incentives: usually a credit or discount offered if you use the builder’s preferred lender. Many times, the lender contributes a portion of the incentive dollars. Using the builder’s preferred lender gives the builder the advantage of getting firsthand lender information about your loan and more control throughout the process. Additionally, the builder and lender have an established relationship that ensures a smooth transaction. Please review your contract carefully and pay attention to how much access you are giving to the builder about your lending information.
    • PRO TIP: Home buyers are sometimes not sure if they should use the builder’s lender for the incentive or go with another lender. Request a fee worksheet from the builder’s lender and send it to a second lender to compete. A second lender can usually provide more advantageous loan terms. The builder’s lender usually does not have the best interest rates, but we see buyers choose them if the incentive is large enough. Very often they will make a plan to refinance 6 to 12 months later to take advantage of a better rate with a different lender.
  • Promotional Incentives: these can come in many forms: lower or no lot premium, free basement finishes, floor upgrades, or other incentives. The sales staff will usually freely provide this information to you.

Related Reading:
Tips for Choosing a Mortgage
Tips for Choosing a Lender

Spec Home

A home that was constructed by the builder before they had a buyer. This is a great option for buyers who want new construction but don’t have time for a dirt start. Builders have become more conservative with the number of spec homes they have in inventory after the 2008 housing crisis.

Related Reading: Tips for Choosing a Builder

Dirt Start

Contracting with the builder to build a new home for you from beginning to end. A dirt start will test your patience because it can seem to take forever. Usually, plans have to be drawn up and go through the permission processes with the city. If you are in a brand new filing, you will have to wait for certain infrastructure like roads, sidewalks, water and sewer lines to be established before your home construction can begin.  Just a few items that have to happen before the pre-foundation dig can begin:

  • Infrastructure established
  • Plans are drawn up/changed or adjusted
  • Plans are submitted for city permits
  • Soil samples are tested


You will hear the sales staff refer to the front design of the home as the elevation. The term refers to all sides of the home.


If you are building a home in a subdivision with a smaller lot and a lot/block legal description, your builder will have an Improvement Location Certificate (ILC) done for you. The ILC is basically a mini survey that usually costs about $500. It will show the location of the structure(s) on your property in relation to the deed lines as described on the legal description.  It will also show if anyone encroaches on your property (usually an issue in older neighborhoods). You will get several copies of the ILC that you can provide to landscapers and fence builders to make sure your get your grading and your fencing done correctly.


Price inquiry

If you have special construction requests for the builder, the sales representative will send a price inquiry to the office which will then price out this request. Your builder might charge you for this inquiry. If you decide to accept the price and move forward with the special request, the builder will apply the price inquiry charge to the special request cost. Otherwise, you are responsible for the price inquiry charge.

Related Reading: Steps to Buy a Home

Change Order

If you request changes after the original contracting, the builder might charge an additional change order fee (on top of the price inquiry fee). Builders do this to discourage multiple change requests.

Download the New Build Guide


You will see this term frequently in semi-custom and custom home construction.  An allowance might also be included in a trac home when money needs to be set aside for certain features of the home. An allowance is typically set for features or inclusions where a specific decision has not been made. For example, you want a gourmet kitchen but have not yet decided on appliances or specific design selections.  Any resulting overages will be paid for by the buyer.

Builder Warranty

Builders are NOT required by law to provide a home builder warranty. Instead, there are common law warranties derived from case law instead of statutory law.

It is up to the buyer to make sure they understand the warranties that come with the house AND what the contract they sign excludes. Look for bold and capitalized paragraphs in the contract.

We often work with builders that provide a full year “bumper to bumper” warranty (excluding appliances). Many builders will have a 2 year large system warranty for furnace, plumbing, electrical and an 8-10 year structural warranty.

The speed and quality of any repairs included as part of these warranties can vary widely by builder. We recommend speaking with customers in the same neighborhood who closed in the previous 12 months. Ask them about their experiences and they will likely be very open and honest.

Related Reading: Tips for Choosing a Builder

Certificate of Occupancy

A Certificate of Occupancy (CO) is necessary for someone to move into a home. This document is issued by a local authority to ensure all inspections have been completed and passed. You will have a copy of your CO in your closing documents.

Walk Throughs

Pre-drywall, electrical and plumbing walk throughs are usually done all at the same time.

  • Pre-drywall walk through
    This is an opportunity to make sure all desired plumbing and electrical systems are in place before drywall covers it up and makes it more difficult to repair.
  • Electrical walk through
     If you are in town for this walk through, print out your electrical systems plan and bring it with you to ensure that everything is in the correct place.
  • Plumbing walk through
    There is less to look at with plumbing unless you have additional hose bibs, sinks in the laundry room or a wet bar installed.
  • Homeowner’s introduction or orientation walk (1 week before closing)
  • Pre-closing walk-through or “pop by” walk through (usually day of closing)

New home buyers often wonder why there is a walk through a week prior to closing and then again right before closing. The walk through a week out allows a builder to see any issues with the home that need to be taken care of prior to closing. It’s a very efficient way to approach this even though, most likely, your home is not 100% complete yet. You’d be surprised to see all the things that get done the last few days prior to closing. At the pre-walk through, you’ll create a list of items that need to be addressed called a punch list. At the pre-closing, you and your construction team will review those items and check off that they were fixed. Anything that has not been taken care of as of that day will be noted. We’ve recently seen delivery delays in the supply chain that affect punch list items being delayed.

Landscape Deposit

Some subdivisions require a landscape deposit ranging from $2,000-5,000. The Home Owners Association (HOA) wants to ensure that you will install your landscaping in timely manner. You will receive this deposit back (minus admin fees) after the HOA reviews your completed landscaping.

Remember, it’s vital to have an experienced agent helping you navigate the sometimes complicated process of building a new home. Our team is here for you every step of the way. Contact us to get started today!

Click here to download the new build guide

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