Buying a New Construction Home in Colorado: Full Guide

Buying a new construction home in Colorado means signing the builder's contract, not the state's, and that one fact drives everything else: the earnest money terms, the delivery date, the inspection rights and the warranty all come from a document the builder's attorneys wrote. Read it with a buyer's agent before the sales office deposit, order your own inspections at three stages, and compare the builder lender's incentive against an outside loan estimate.

This guide covers the Front Range production build from Fort Collins to Colorado Springs: Lennar, Richmond American, Toll Brothers, KB Home, Meritage, Century Communities, Taylor Morrison, David Weekley, Shea and Tri Pointe in communities such as Sterling Ranch, Painted Prairie, The Canyons, Crystal Valley, RidgeGate, Reunion, Barefoot Lakes and Independence. The build or buy a new home post covers the custom-build side and the resale comparison.

How is the builder's contract different from the Colorado contract?

Resale homes in Colorado trade on the Colorado Real Estate Commission's approved Contract to Buy and Sell, with dated deadlines for inspection, appraisal, loan and title objections and earnest money returned when a deadline is used. Production builders use their own purchase agreement. The common differences:

• No inspection objection. You inspect, the builder decides what to fix, and you close anyway.
• No appraisal contingency in most builder contracts; a low appraisal means more cash from you.
• Estimated completion dates with no penalty for delay and an extension right for the builder.
• Substitution clauses letting the builder change materials, fixtures and finishes to equivalents.
• Mandatory arbitration and a waiver of jury trial.
• The builder's title company and closing date, with per-day fees if you cannot close on their day.

Every one of these is negotiable to some degree on a lot that has not sold, and none of them are negotiable after the sales office deposit is cashed. The use a Realtor when buying from the builder post explains why the sales counselor works for the builder, and the buyer's agent for new construction page covers registering your agent on the first visit, which most builders require before the agent is paid.

How much earnest money, and is it refundable?

Front Range builders ask $5,000 to $25,000 at contract on a production home and 25% to 50% of the design center total as a separate deposit, non-refundable once selections are ordered. Lot premiums and structural options are added to the deposit on some contracts. Unlike the state contract, the builder's contract refunds earnest money only for the reasons it lists, and loan denial is not always one of them. Get the refund conditions in writing, and get a written loan pre-approval before the deposit so financing is not the reason the money is lost.

What is a metro district and what does it cost?

Most new Front Range communities are metropolitan districts: Title 32 special districts the developer forms to issue bonds for the roads, water lines, parks and drainage, repaid by a mill levy on every home in the district for 20 to 40 years. The mill levy sits on the property tax bill, and it is why two identical $650,000 homes, one in a 1990s Centennial subdivision and one in a new Douglas County or Adams County community, carry property tax bills that differ by 30% to 100%.

Before the contract: look the district up on the Colorado Division of Local Government's special district map, read the service plan and the current debt, and ask the builder for the total mill levy in writing. Metro district fees also stack with an HOA in most communities. The post on how HOAs, metro districts and taxes affect Denver metro buyers works through the math community by community.

What does the builder have to tell me about the soils?

Colorado law requires a builder to give the buyer of a new home a summary of the lot's soils report and a booklet on expansive soils before closing. Read both. The Front Range sits on bentonite clay that swells when wet and shrinks when dry, and the soils report is why the home has drilled piers with void forms, a floating basement slab or a structural wood floor over a crawlspace, and a slip joint at the top of every basement partition wall. Ask the builder which foundation system the lot got and why, and keep the report; the next buyer and the next engineer will ask for it. The benefits of a new construction home in Colorado page covers what the current foundation and energy codes deliver over a 1990s resale.

What does the warranty cover, and for how long?

Colorado has no state-mandated new home warranty. Production builders provide a written limited warranty, in most cases through a third-party warranty company: 1 year on workmanship and materials, 2 years on plumbing, electrical and HVAC systems, and 10 years on major structural components. The structural coverage is narrow; read what counts as a structural defect and what the claim process is.

Outside the warranty, Colorado's construction defect statute of repose gives a homeowner 6 years from substantial completion to bring a defect claim, extended to 8 years when the defect is discovered in year 5 or 6. That is the clock behind the 11-month inspection described below.

Should I use the builder's lender?

Compare. Builders own or partner with a mortgage company and offer $10,000 to $30,000 in closing cost credits or a rate buydown for using it, disclosed under an affiliated business arrangement. Sometimes the incentive is real money; sometimes it is offset by a higher rate, a higher price or fees the outside lender does not charge. The only way to know is a side-by-side loan estimate.

Mike Oswald, VP of Mortgage Lending at Rate, NMLS 261003, Equal Housing Lender, provides that comparison estimate for Kenna Real Estate Group buyers within a day, including extended rate locks of 180 to 360 days for homes still under construction. You are free to use any lender. Start on the Colorado home financing page, and check the Colorado closing costs guide for the line items the builder credit is applied against.

When do I inspect a new build?

City and county inspectors check code minimums, not workmanship, and they check for the builder, not for you. Put the right to have your own inspector at pre-drywall and final in the contract before you sign. Colorado is a high-radon state; ask whether the radon system is a passive rough-in or an active fan, and test after closing.

What happens at the walk-through?

The builder's orientation walk is 1 to 2 hours, 3 to 7 days before closing. Bring blue painter's tape and your final inspection report. Mark every scratch, chip, paint miss, sticking door and gap; the builder writes the punch list from what gets tagged. Photograph the list and every tagged item, run every faucet, every appliance and the HVAC in both modes, and check the window screens, garage door opener and sprinkler controller. Items not finished by closing go on a written completion agreement with a date; do not close on a verbal promise.

What is not in the base price?

• Backyard landscaping and fencing. Front Range builders finish the front yard and leave the back as dirt; the HOA gives you 6 to 12 months to landscape and fence it, at $12,000 to $35,000.
• Window coverings, garage door opener, refrigerator, washer and dryer on many plans.
• Lot premiums, structural options and design center upgrades, which add 10% to 25% to the base price on a typical Denver metro contract.
• Air conditioning on some base plans north of Denver.
• Metro district and HOA transfer and capital fees at closing.

Why does the tax bill jump in year two?

The county assessor values the lot as land only on January 1 of the year the home is finished, so the first year's taxes, and the escrow the lender collects, are based on dirt. The next year the home is assessed as a home, the metro district levy applies to the full value, and the escrow account comes up short by $3,000 to $8,000 on a $600,000 home. Ask the lender to escrow on the projected improved value from day one and the shortage never happens.

How long does the build take, and where?

A Front Range production home runs 6 to 10 months from contract to closing; a quick move-in spec home closes in 30 to 60 days. Builders are active in Aurora (Painted Prairie, The Aurora Highlands, Harmony), Littleton (Sterling Ranch), Castle Pines (The Canyons), Castle Rock (Crystal Valley, Macanta), Lone Tree (RidgeGate), Commerce City (Reunion), Firestone (Barefoot Lakes), Elizabeth (Independence), Erie, Windsor, Timnath and the northeast side of Colorado Springs. The new construction homes in Colorado by area page lists what is selling in each, and the post on new construction ranch homes on the Front Range covers the single-level plans.

The Colorado home buyers guide covers the standard contract this post compares against, and the buyer services page explains what the Kenna Real Estate Group does at the sales office, the design center and the walk-through. New builds and resales sit side by side on every home for sale in Colorado.

Where to go next

• New construction homes in Colorado by area
• Do you need a buyer's agent for new construction in Colorado?
• Is it better to build or buy a new home?
• Use a Realtor when buying a new home from the builder
• Mortgage pre-approval for Colorado buyers
• Meet the agents of the Kenna Real Estate Group

Talk to the Kenna Real Estate Group

The Kenna Real Estate Group, Keller Williams DTC, registers with the builder on your first visit, reads the purchase agreement and the metro district service plan before the deposit, negotiates the lot premium and closing credits, and schedules the pre-drywall, final and 11-month inspections. Call or text 303-955-4220. A live person answers. Not a robot, not a phone tree. Or search every home for sale in Colorado and filter for new construction.