New construction homes are attractive: brand-new appliances, modern finishes, and the joy of being the very first owner. But as you tour model homes, you might hear builders offer “incentives” to sweeten the deal. These can be tempting—but they also deserve a closer look.
So, what are builder incentives, and what should you watch out for?
What Are Builder Incentives?
Builder incentives are perks or discounts offered by home builders to encourage buyers to purchase one of their properties. These can include:
- Closing cost assistance
- Free or discounted upgrades (think granite countertops or premium flooring)
- Interest rate buydowns through preferred lenders
- Price reductions or bonus cash
- Free appliances or landscaping packages
Builders often use these incentives to move inventory faster—especially at the end of a quarter or when they’re close to finishing a community.
The Upside: Why Incentives Can Be Great
If used wisely, incentives can save you money or allow you to add features that would otherwise stretch your budget. For example:
- You might receive $10,000 in design center credits for choosing flooring, cabinets, or fixtures.
- The builder might cover thousands in closing costs—reducing your out-of-pocket expenses.
- You could lock in a lower interest rate if you go with the builder’s preferred lender.
What to Watch Out For
Not all incentives are created equal. Before you sign a contract, keep these points in mind:
1. Incentives May Be Tied to Specific Lenders
Many builders require you to use their preferred lender to get the full incentive. While this can be convenient, it’s smart to compare rates and terms with an outside lender—you may still get a better overall deal elsewhere.
2. The “Discount” May Already Be Priced In
That $20,000 price reduction? It could be a marketing tactic. Builders sometimes inflate prices to make incentives appear more generous. Your real estate agent can run a market comparison to ensure you’re getting a fair deal.
3. Upgrades Add Up Quickly
Design centers are full of beautiful options—and upcharges. Know what’s included in the base price vs. what’s considered an “upgrade,” and stick to your budget. Ask for a list of standard features.
4. Builder Contracts Favor the Builder
New construction contracts are different from resale transactions—and often heavily favor the builder. Have your agent review the terms with you, and don’t skip the fine print.
Builder incentives can be a great opportunity—if you know what you’re getting into. Always have a trusted real estate agent by your side during new construction purchases. They can help you negotiate, read between the lines, and make sure the “deal” is truly a deal.
Thinking about buying new construction? Let’s chat before you visit the model homes—I’ll help you navigate the process with clarity and confidence.
If you’re considering a move or investment and require a trusted Real Estate Broker, we’re here to assist you. Contact us via email at TEAM@McDanielCallahan.com, complete the form below, or give us a call at 925-838-4300. We are ready to provide expert guidance and support for all your real estate needs. Terry McDaniel DRE License #00941526
Find a Broker™ 