Buying New Construction in the Twin Cities: What to Know Before You Sign the Builder’s Contract

By Greg & Tracy | June 19, 2026

You walk into the model home, the finishes are perfect, and the on-site agent is warm, helpful, and ready to write up your offer that afternoon. It feels easy. That’s exactly the moment to slow down.

Buying new construction is one of the most appealing paths in the Twin Cities right now—especially in the west metro, where spec homes and to-be-built inventory give move-up buyers a way around a tight resale market. From production neighborhoods in Maple Grove, Rogers, and Lakeville to custom lake-access builds in Wayzata and Orono, there’s more new product to choose from than most buyers expect. But the transaction works differently than buying a resale home, and the differences are the kind that cost you real money if no one points them out.

Here’s what every Twin Cities buyer should understand before signing a builder’s purchase agreement.

The on-site agent works for the builder — not for you

This is the single most important thing to internalize, and it’s the one builders are quietest about. The pleasant person in the model home is the builder’s agent. Their job is to generate sales for the builder and to represent the builder’s interests in your transaction. That isn’t a dual-agency relationship where they’re balancing both sides—in Minnesota, dual agency is allowed only with the informed written consent of both parties, and even then the agent’s ability to advocate for you is limited. With a builder’s on-site rep, there’s usually no such consent, because they were never representing you in the first place.

So who’s looking out for you? Whoever you bring. You have the right to your own buyer’s agent, and here’s the part that surprises people: most builders offer to pay your agent’s commission, which means having your own representation generally costs you nothing. Your agent can press for better terms, negotiate upgrade allowances or closing-cost credits instead of leaving them on the table, read the builder’s contract with a skeptical eye, and keep your earnest money and inspection rights intact.

One practical note: most builders want your agent involved on your first visit. If you register at the model home alone and come back later with an agent, some builders will refuse to recognize them. If you’re even thinking about new construction, loop in your agent before you tour. The same discipline you’d use vetting a custom builder applies here—we walk through it in our guide to interviewing a Twin Cities home builder.

The contract is the builder’s document — read it like one

A resale purchase in Minnesota runs on a standard purchase agreement that’s been negotiated and refined for decades to balance both sides. New construction doesn’t. Builders use their own in-house contracts, and those contracts are written to protect the builder. That’s not a scandal—it’s just whose paper you’re signing. It does mean you can’t assume the protections you’d get on a resale are there.

Two clauses deserve special attention:

Earnest money. On a resale, earnest money in the Twin Cities typically runs 1% to 2% of the price. On new construction, builders commonly ask for around 5%, and high-end or fully custom projects can ask for up to 10%. On an $800,000 build, 5% is $40,000. That money is normally held in escrow and credited toward your down payment or closing costs—but confirm it’s held by a neutral escrow agent, not by the builder directly, and read exactly what happens to it if construction is delayed, if your financing changes, or if you need to walk.

Upgrade and option deposits. This is where buyers get hurt. When you add options beyond the base contract—the better kitchen, the finished lower level, the upgraded windows—the builder usually requires an additional deposit, often 25% to 100% of the option price, and those deposits are frequently nonrefundable. Builders order materials and schedule trades around your selections, so once you’ve chosen, you’ve committed. The design center is where a $750,000 base price quietly becomes $900,000, and where a chunk of that becomes money you can’t get back. Set your finish budget before you walk into that appointment, and decide in advance what’s a must-have versus a nice-to-have.

The financing and appraisal traps unique to new construction

Builders love to advertise incentives—a mortgage rate buydown, a closing-cost credit, a design-center allowance. Some of these are genuinely valuable. But two things are true about almost all of them.

First, the incentive is usually tied to the builder’s preferred lender. Bring your own lender and you typically forfeit the perk. That doesn’t make the preferred lender a bad choice—but it does mean you should still get an independent quote and compare the all-in cost, not just the advertised rate. A builder can offer an eye-catching rate because the cost of buying it down is often baked into the base price or the design-center markup.

Second, and this trips up even experienced buyers: a rate buydown lowers your monthly payment, not the purchase price or the appraisal. Builders often prefer to hand out incentives rather than cut sticker prices, partly because visible price cuts upset earlier buyers and reset the comparable sales that future appraisals lean on. If you’re buying in a newer neighborhood where the builder is still selling, ask your agent to look hard at whether the price is supported by real comps—because with today’s 30-year rates sitting in the mid-6% range, the appraisal is where a thin deal can fall apart. If you’re weighing how aggressive to be on price and terms overall, the same playbook we use on resale offers applies here too: how to write a winning offer without overpaying.

Yes, you still need an inspection

“It’s brand new—what’s there to inspect?” Plenty. A new home built to current Minnesota code is not the same as a home built without mistakes. Crews work fast, multiple trades pass through, and things get missed—a backwards-vented bath fan, a plumbing connection left loose, insulation gaps that you’ll feel on the first cold snap. Build-quality complaints are one of the most common regrets buyers voice about new construction, and the way you protect yourself is simple: inspect it.

For new construction, that ideally means two looks—one before drywall, while the framing, wiring, and plumbing are still visible, and one final walkthrough inspection before closing. Keep your inspection rights in the contract even if the builder waves them off. Catching a defect while the builder is still contractually on the hook is far cheaper than discovering it the first winter you own the place.

What new construction actually buys you in a Minnesota winter

None of this is a case against buying new. There are real, durable advantages—they’re just worth paying for with your eyes open.

• Energy efficiency. Homes built to current Minnesota code have dramatically better insulation, windows, and HVAC than homes built even 30 years ago—which shows up directly on your heating bills through a Twin Cities winter.
• Minnesota-specific design. New builds are planned around how we actually live here: a real mudroom for boots and gear, and construction detailing that helps prevent the ice dams that plague older roofs.
• Warranties. Most builders include workmanship and structural warranties, so the first few years carry far less maintenance risk than a resale.
• Customization. Choosing your lot, layout, and finishes is the part buyers love—just remember that’s also where the budget moves. For a closer look at how far customization goes and what it costs, see customizing your new build in Minnesota.

The trade-off is price and timing. The 2026 resale median in the Twin Cities is around $390,000, while a mid-range new build generally runs $800,000 to just over $1,000,000 all in—and luxury new construction in Wayzata, Orono, and Edina starts well above that. If you’re buying off-plan, you’re also accepting the risk of construction delays against your move-in date. New construction wins on the long game; resale usually wins on the upfront number.

One more thing for move-up buyers

Most people buying a new home in this price range have a current home to sell first—and that’s where the two sides of your move connect. The earnest money, the upgrade deposits, and your down payment all depend on equity that’s tied up in your existing house. Before you sign a builder’s contract with a 5% deposit and a design-center bill on top, you want a clear, realistic picture of what your current home will net and when. Signing a build contract on an optimistic guess about your own sale is how buyers end up stretched at exactly the wrong moment.

That’s the piece we help with first. We’ll prepare a free, no-pressure valuation of your current Twin Cities home—what it would realistically sell for today and what you’d walk away with after costs—so you can structure a new-construction purchase around real numbers instead of hopeful ones. Reach out to Greg & Tracy and the Hammer Group team, and we’ll map the whole move—sell side and buy side—before you put your name on anything.

Frequently Asked Questions

How much earnest money do you need to buy new construction in the Twin Cities?

Most Twin Cities builders ask for about 5% of the purchase price on a new-construction home—well above the 1% to 2% common on a resale—and high-end or custom projects can ask for up to 10%. On an $800,000 build, that’s roughly $40,000. It’s normally held in escrow and applied to your down payment or closing, but builder contracts can make it harder to recover than a standard purchase agreement, so read the deposit terms closely.

Do I need my own agent to buy new construction in Minnesota?

You’re not required to, but you should. The on-site agent at the model home represents the builder, not you—that’s single agency for the builder, not dual agency, which Minnesota allows only with informed written consent. Most builders offer to pay a buyer’s agent commission, so bringing your own representation generally costs you nothing while giving you an advocate for the contract, the upgrades, and your earnest money.

Should I use the builder’s preferred lender?

Get their quote, but compare it against an outside lender first. Builder incentives are usually tied to financing through the preferred lender, and you forfeit them if you bring your own—but a rate buydown lowers your payment without lowering the price or appraisal, and its cost is often baked into the base price. Compare the all-in numbers both ways instead of chasing the advertised rate.

Do I need a home inspection on a brand-new house?

Yes. New construction built to code still isn’t flawless—fast-moving crews miss things, and build-quality issues are a top regret among new-home buyers. An independent inspection, ideally before drywall and again before closing, catches defects while the builder is still contractually responsible for fixing them. Keep your inspection rights in the contract even if the builder discourages it.

Is it cheaper to buy new construction or a resale home in the Twin Cities?

Resale is usually cheaper up front—the 2026 Twin Cities median is around $390,000, while a mid-range new build runs $800,000 to just over $1,000,000 all in, and luxury new construction in the west metro climbs higher. New construction can win on energy efficiency, warranties, and lower near-term maintenance. Which nets out better depends on how long you’ll stay and what an older home would cost you to update.