The Most Important Rule: Bring Your Own Agent
The builder’s on-site sales representative is not your agent. They are the builder’s employee, paid to sell you the home on the best terms for the builder. They will be professional, helpful, and informative -- and their job is to protect the builder’s interests, not yours.
In California, most builders offer buyer agent compensation. This means having your own agent costs you nothing out of pocket -- the builder pays. With Roman’s flat fee model, the builder offers commission (typically 2-3%), Roman takes the flat fee, and the remainder is negotiated back to you as a closing cost credit. You get independent representation and money back at closing, at no additional cost.
Register your agent on the first visit. Most builders require a buyer’s agent to be registered on the buyer’s first visit to the sales office. If you visit without registering Roman and then try to bring him in later, the builder may deny the agent relationship -- and you lose the representation advantage. Contact Roman before visiting any new construction sales office.
What your own agent provides at a new construction site: independent review of the builder contract before you sign, negotiating strategy on upgrades and closing costs, a check on whether the builder’s preferred lender is actually competitive, and oversight through the construction and closing process that the builder’s team will not provide on your behalf.
The Builder Contract Is Not the Standard California RPA
This is the single most important distinction between new construction and resale in California. When you buy a resale home, the transaction uses the California Association of Realtors Residential Purchase Agreement -- a buyer-friendly form developed over decades that protects both parties. When you buy new construction, you sign the builder’s contract -- written by the builder’s lawyers to protect the builder.
Key differences to understand
Liquidated damages and deposit at risk. Builder contracts typically include larger deposit requirements (often 1-5% of purchase price) and stricter liquidated damages provisions. If you cancel outside of allowed contingency periods, you may forfeit a significant portion of your deposit.
Limited contingencies. Builder contracts often have fewer buyer protections than the CAR RPA. Inspection contingencies may be limited or structured differently. Appraisal contingencies may not be included or may be harder to exercise.
Construction delays. Builder contracts typically give the builder significant flexibility on completion timelines -- with limited buyer remedies for delays. Understand what happens to your rate lock and living situation if the home takes 6 months longer than promised.
Substitution clauses. The builder may reserve the right to substitute materials, finishes, or features of comparable quality. Read these clauses carefully -- "comparable quality" is defined by the builder, not you.
Have an independent attorney or your buyer’s agent review the builder contract before signing. The deposit at risk and the limited contingency structure make new construction contracts higher-stakes documents than a typical resale offer. Roman reviews every builder contract before his clients sign and flags provisions that differ significantly from standard California RPA protections.
Mello-Roos -- The Hidden Cost That Changes the Monthly Payment
Mello-Roos is a Community Facilities District (CFD) special tax that appears as a separate line item on property tax bills in newer California developments. It is used to fund infrastructure -- roads, schools, parks, utilities -- that was built specifically for the new community. In LA and OC, Mello-Roos assessments on new construction communities can add $3,000-$12,000+ annually to your property costs.
How to find the actual Mello-Roos amount
Ask the builder’s sales agent for the current CFD assessment amount per year. Get it in writing. Also request the property tax estimate sheet, which should show the full estimated annual property cost including base tax, Mello-Roos, HOA, and any other assessments. Do this math before you fall in love with a specific lot or floor plan.
Mello-Roos is also disclosed in the California DRE public report, which the builder is required to provide before any purchase. Read the CFD section carefully -- it will disclose the annual assessment, how long it runs, and what it funds.
Mello-Roos and your monthly payment
A $6,000 annual Mello-Roos assessment is $500/month added to your housing cost. That $500/month, at a 43% DTI, requires approximately $1,163 in additional monthly gross income to qualify. Add this to your calculation before setting your search budget. Many buyers focus on the purchase price and overlook the Mello-Roos impact on both monthly cost and qualification.
Mello-Roos is not permanent. CFD assessments typically run for 25-40 years from the date the district was formed, or until the bonds are paid off. Some communities are nearing the end of their Mello-Roos period -- which means lower ongoing costs and potentially a pricing discount relative to newer communities with fresh 40-year assessments. Roman checks the CFD start date and remaining term on every new construction property.
Phase Pricing and When to Buy
Builders release new homes in phases. Phase 1 is typically priced lowest -- the builder needs to generate sales velocity, establish comparables, and build community credibility. Each subsequent phase typically carries a price increase of 2-5% as the community fills in and demand builds.
The tradeoff
Early phase buyers get the lowest price but also the most construction disruption (neighboring lots still being built, community amenities not yet complete, mud and noise for months or years). Late phase buyers pay more but move into a finished community with established comps and completed amenities. Neither is universally better -- it depends on your timeline and tolerance for construction inconvenience.
When builders are most negotiable
Builders are most willing to negotiate on incentives at two specific moments: at the beginning of a new phase (before they establish pricing momentum) and when they have completed or nearly-completed homes sitting unsold. A finished spec home that has been sitting for 60-90 days is a carrying cost problem for the builder -- that is when closing cost credits, rate buydowns, or upgrade packages become genuinely available. Roman monitors builder inventory in active LA and OC communities and identifies spec home opportunities for clients who are ready to move quickly.
The Design Center -- What to Buy and What to Skip
After signing a purchase agreement, most builders bring you to a design center to select finishes, flooring, countertops, appliances, and upgrade options. Design center upgrades are marked up significantly relative to the actual cost of the materials and labor. Some upgrades are worth paying the premium; many are not.
Worth buying at the design center
Structural options -- moving walls, adding windows, extending a room, adding a bedroom, creating a bonus space. These require permits and access to the framing stage. Once the home is built, structural changes become dramatically more expensive. If you want them, this is the only practical time to buy them.
Electrical and plumbing rough-in -- extra electrical circuits, plumbing for future bathroom additions, EV charging conduit, gas stub-outs. Doing these after the drywall is up requires demolition and is far more expensive than adding them during construction.
Appliance packages -- if the builder is offering a specific appliance package at a bundled price below market, it may be worth it. Compare to current retail prices before accepting or declining.
Often overpriced at the design center
Flooring upgrades -- particularly carpet-to-hardwood upgrades. The builder’s design center typically charges $8-15/sqft for flooring that an independent flooring contractor can install for $4-8/sqft after move-in. Unless you want to finance the flooring into your mortgage, doing it yourself after closing is usually significantly cheaper.
Countertop upgrades -- the premium for granite to quartz or quartz to higher-end stone is often 2-3x what you would pay with an independent fabricator.
Landscaping packages -- front and back yard landscaping through the builder is almost always overpriced. Get independent bids after move-in.
The financing argument for design center upgrades: One reason to buy upgrades at the design center even at a premium is that they can be financed into your mortgage. $30,000 in flooring at the design center becomes part of your loan at 6.5% over 30 years -- roughly $190/month. The same flooring paid cash after move-in is $30,000 out of pocket immediately. For cash-constrained buyers, the financing benefit can offset the price premium. Model the full cost before deciding either way.
The Builder’s Preferred Lender -- Evaluate Carefully
Almost every major builder in LA and OC has a preferred (or "affiliated") lender. They will offer incentives -- closing cost credits, rate buydowns, free upgrades -- to use their lender. These incentives are real. They are also funded by the economics of the lending relationship, which may include a higher rate or fees.
How to evaluate the preferred lender offer
Get a full loan estimate (Loan Estimate form) from the builder’s lender showing the interest rate, APR, origination fees, and estimated monthly payment. Then get the same loan structure quoted by an independent lender or mortgage broker on the same day. Compare the total cost over 5-7 years (the typical hold before refinancing or selling), not just the monthly payment or the incentive amount.
A $10,000 closing cost credit from the builder’s lender is worth $10,000. A 0.25% rate increase on a $1M loan costs approximately $1,500/year -- $7,500 over 5 years. In that scenario, the incentive nearly covers the rate premium. At 0.5% higher, the rate premium exceeds the incentive value over the same period. Run the numbers for your specific loan amount and expected hold time.
Rate lock considerations
New construction purchases have unpredictable closing timelines. Construction delays are common in LA and OC. Standard 30-60 day rate locks may expire before your home is complete. Ask both the builder’s lender and independent lenders about extended rate lock programs -- typically 6-9 month locks for new construction -- and the cost of those extended locks. Factor the rate lock fee into your lender comparison.
How Flat Fee Representation Works with Builders
The flat fee model applies to new construction the same way it applies to resale. Most LA and OC builders offer buyer agent compensation. Roman takes his flat fee ($7,250 under $1.5M, $9,250 at $1.5M+), and the difference between the builder’s offered compensation and the flat fee is negotiated back to you as a closing cost credit.
On a $1.2M new construction home where the builder offers 2.5% buyer agent compensation:
Builder offers $30,000 in buyer agent compensation
2.5% of $1,200,000. This is part of the builder’s pricing structure -- it does not come out of your pocket separately.
Roman takes the flat fee: $7,250
Per the BRBC signed before the first sales office visit.
$22,750 negotiated back to you
Structured as a seller (builder) concession in the purchase contract, applied against your closing costs -- subject to the builder’s agreement as part of the purchase terms.
Some builders resist the closing cost credit structure and prefer to keep the full commission in-house or have it go to their own sales team. Roman navigates this on a builder-by-builder basis. In communities where builders limit or restrict buyer agent compensation, the terms will be disclosed before any visit and discussed before any purchase agreement is signed.