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Hidden Costs in New Construction | Expert Guide for Arkansas Buyers & Investors
- Christy Robinson
- 6 hours ago
- 4 min read
The Truth Behind “Brand-New”
As real estate professionals, we often hear buyers say, “I want new construction so I don’t have to worry about repairs.” That’s a fair thought — but it’s only half the story.
The reality is that “new” doesn’t mean “free from surprises.” From lot prep and utility setup to warranties, taxes, and post-closing expenses, many first-time builders underestimate their total cost by 10–20%.
In Central Arkansas — where new developments are expanding rapidly across Maumelle, Bryant, Cabot, and Conway — it’s crucial to understand how each phase adds up.
This guide breaks down the hidden costs, local case studies, and smart strategies to build or buy with confidence.
1. Site Preparation & Land Development
Clearing, Grading, and Utilities
Even before the foundation is poured, the site must be cleared and graded for drainage and code compliance. In Pulaski and Saline Counties, this alone can range from $2,500 to $15,000+, depending on:
Lot slope and tree removal
Soil compaction and dirt import/export
Driveway base requirements
Water/sewer accessibility
When building in rural areas around Ferndale or Alexander, private wells, septic systems, or power extensions can each add $5,000–$20,000 to the project.
💡 Tip: Request a builder’s site evaluation report upfront. It should include soil testing, percolation (for septic), and stormwater runoff planning.
Learn more: Arkansas Department of Health – Onsite Wastewater Systems
Permitting: Pulaski County Planning & Development
2. Permits, Impact Fees & Code Compliance
Every new home must meet local building codes, energy standards, and environmental regulations.What’s often missed: permit and impact fees vary dramatically by municipality.
📎 Check before you build: Arkansas Contractors Licensing Board
💡 Expert Insight: Builders sometimes “bundle” permit and fee costs into your base price but omit city utility taps or inspection re-runs. Always ask for a line-item breakdown before signing.
3. Utilities & Energy Connection Costs
Even in established subdivisions, utility tie-ins aren’t always straightforward.Typical costs across Central Arkansas include:
Water/sewer tap: $2,000–$4,000
Electric connection (Entergy Arkansas): $500–$2,000
Gas meter installation: $300–$1,000
Propane system (rural): $1,500–$3,000
💡 Pro Tip: Ask Entergy or CenterPoint Energy if cost-sharing programs are available for underground service — sometimes a subdivision-wide install can offset private trenching costs.
4. Builder Upgrades, Allowances & Change Orders
Here’s where budgets can quietly balloon.
Many buyers choose “base price” plans only to discover that flooring, lighting, and hardware are allowances with limited coverage.Once selections exceed those allowances, the builder issues a change order — often with a 20–30% markup over retail cost.
Common underestimated line items:
Flooring upgrades (hardwood vs. LVP): +$5,000–$10,000
Cabinet & hardware packages: +$3,000+
Trim, paint, and lighting packages: +$2,000–$6,000
Appliance upgrades: +$3,000–$8,000
Smart-home wiring (security, cameras, automation): +$1,500+
💡 Expert Tip:Request the builder’s “standard features sheet” and compare it to your upgrade list. Create a side-by-side spreadsheet showing cost vs. ROI potential for resale.
5. Insurance, Taxes, and Warranty Costs
Property Taxes
New construction is often reassessed post-closing, catching buyers off guard.Example: A $400,000 home in Saline County might be assessed at $200,000 (50%) × millage rate (~0.052) = $10,400/year — but after a full reassessment, taxes could jump 15–20%.
💡 Tip: Ask your lender to base escrow estimates on the future appraised value, not pre-construction land value.
Builder Warranties
Standard warranties usually include:
1 year: Workmanship & materials
2 years: Major systems (HVAC, electrical, plumbing)
10 years: Structural (foundation/framing)
But they rarely cover settlement cracks, landscaping, or drainage. Always clarify what “structural” includes — and keep warranty contact details handy for post-close claims.
6. Landscaping, Driveways & Exterior Finishes
Even turnkey homes often skip these essentials:
Sod or irrigation system
Privacy fencing
Gutters/downspouts
Driveway extensions or patios
These can add another $10,000–$25,000 after closing, especially if you want to match neighboring curb appeal or HOA standards.
💡 Local Tip: In Maumelle and Bryant, several HOAs require pre-approved fencing or sod coverage before move-in. Always review HOA bylaws early to avoid rework.
7. Builder Contracts: Red Flags to Watch
Even experienced buyers miss key clauses. Before signing:
“Builder deposit” terms: Clarify if refundable and under what conditions.
Escalation clause: Some contracts allow cost increases due to material spikes.
Completion timelines: Ensure liquidated damages are defined.
Warranty provider: Confirm if it’s builder-backed or third-party issued.
💡 Pro Tip: Hire a real estate agent experienced in new construction — not just a buyer’s agent. They’ll help interpret builder addenda, coordinate inspections, and protect your interest from pre-drywall through punch list.
8. Investor & ROI Considerations
New builds can be lucrative — but only with disciplined cost management.
Example: A 2,200-sq-ft build in Cabot priced at $190/sq ft = $418,000.Adding $35,000 in unplanned site and finish costs pushes ROI down by 1.5–2% on resale.
For build-to-rent (BTR) investors, the risk compounds if property taxes, insurance, and HOA dues aren’t modeled realistically.
Use your pro forma to:
Budget 2–3% for post-closing improvements
Include an allowance for reassessment-based tax increases
Add a maintenance reserve even for new homes
How to Avoid Hidden Costs — Expert Checklist
✅ Demand transparency. Line-item every phase from dirt work to gutters.
✅ Ask for builder references. Call 2–3 past clients from the last 18 months.
✅ Inspect during construction. Schedule pre-drywall, pre-close, and 11-month inspections.
✅ Factor post-closing expenses. Fence, blinds, appliances, and yard all count.
✅ Work with a construction-savvy Realtor. Someone who’s walked dozens of build sites can spot red flags before they cost you.
Conclusion: Build Smart, Not Blind
New construction in Central Arkansas can be one of the most rewarding investments you’ll ever make — but only if you go in with full awareness. From the first grading invoice to the final warranty call, transparency and planning protect both your budget and your peace of mind.
Whether you’re a buyer, builder, or investor ready to break ground in Maumelle, Bryant, Cabot, or Conway, partner with a professional who knows what’s hiding between the blueprints.
Let’s Make a REALESTATEMENT.📞 (501) 830-7079 |📧 christy.robinson@kw.com
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