Ask a Texan what protects them when they sign a home purchase contract, and most will say the same thing: the option period. Pay a small fee, usually a few hundred dollars. Under the Texas Real Estate Commission's current resale contract, a buyer who pays the agreed option fee may terminate for any reason during the option period, and any earnest money is refunded if the buyer gives timely notice. Buyers who have purchased a home in this state before treat the option period as a given.
In Frisco, that assumption is the problem.
Frisco's housing stock skews harder toward new construction than almost any other city in this part of North Texas, which means a large share of buyers here are not signing the standard Texas Real Estate Commission contract at all. They are signing a contract the builder wrote, and that contract does not have to include an option period, does not have to mirror Texas Real Estate Commission's termination rights, and often asks for more money up front with fewer ways to get it back. The two documents can look similar enough at a glance that a buyer coming from a resale purchase, or from out of state, does not notice the difference until they need the protection that isn't there.
Why This Shows Up More in Frisco
Frisco's growth has been built almost entirely on master-planned new construction. Communities like Fields West bring together Toll Brothers, Perry Homes, Shaddock Homes, and Britton Homes under one development. The Grove Frisco pairs American Legend Homes with Highland Homes and Southgate Homes. Edgestone at Legacy mixes Belclaire Homes, Coventry Homes, and Huntington Homes. Lexington Frisco runs Shaddock Homes, Landon Homes, and Toll Brothers side by side. Phillips Creek Ranch is a Toll Brothers luxury community, and Hollyhock brings in Drees Custom Homes, Coventry Homes, and Trophy Signature Homes.
So, a buyer's prior experience purchasing a home in Plano or Allen, where resale inventory and standard contracts dominate, does not fully transfer to a Frisco new-build purchase.
The Document Most Buyers Never Compare Line by Line
The differences between a resale contract and a builder's contract are not cosmetic. Here is where they typically diverge:
Resale (TREC Contract) | Typical Builder Contract | |
|---|---|---|
Earnest money | Around 1 percent of price | Commonly 3 to 5 percent, sometimes more on custom builds |
Option period | Standard, negotiated length, buyer can terminate for any reason during it | Often absent or replaced with narrower, builder-defined terms |
Deposit structure | Single earnest money deposit at contract | Earnest money plus separate progress deposits at construction milestones for some builders |
Upgrade funds | Not applicable | Design center selections may require their own deposit, at risk if the buyer cancels |
Financing fallout | Buyer can typically terminate under the financing contingency and recover earnest money | Depends entirely on the builder's contract language, which varies builder to builder |
The Texas Real Estate Commission's own guidance confirms the baseline: TREC contract forms require earnest money delivery to an escrow agent, and the option period is what gives resale buyers room to walk away without penalty. Builder contracts are not required to include that same structure, and most do not replicate it in full.
The Money Moves in Stages, and So Does the Risk
On a resale purchase, a buyer writes one earnest money check and that is largely the extent of it until closing. With new construction, buyers are often asked for an initial deposit at signing, then, depending on the builder, additional progress deposits as the home hits certain construction milestones. If the buyer has added design center upgrades, those selections frequently carry their own deposit requirement, sometimes a significant percentage of the upgrade cost itself, and that money is exposed if the buyer cancels after selections are locked in.
Custom and semi-custom builds push this further. Total deposits across earnest money, progress payments, and upgrades can add up to a meaningful share of the purchase price well before the buyer ever reaches a closing table. Each of those deposits is governed by whatever the builder's specific contract says about refundability, and that language is not standardized the way it is on a resale form.
What Happens When the Financing Doesn't Come Through
Whether a builder's preferred lender falls through, and whether that failure entitles the buyer to a refund, depends on how that specific builder's financing contingency is written. A resale buyer under a TREC contract has a well-established path back to their earnest money if financing collapses. A new construction buyer's path depends on paragraph language that varies by builder and is worth reading before signing, not after a lender calls with bad news.
Where This Leaves You Before You Sign
None of this means new construction in Frisco is a bad decision. Builders here generally offer real incentives: closing cost credits, rate buydowns, and occasionally prepaid HOA dues or property taxes for a set period. Those incentives can be worth real money. The point is narrower: the contract that delivers those incentives is not the same contract, and does not carry the same protections, as the one most Texans picture when they hear the word "earnest money."
Before signing a builder contract in Frisco, it is worth confirming in writing:
- Whether any option period exists, and if so, how many days it covers and what it actually allows you to do
- What triggers each progress deposit and whether any of them are refundable under any circumstance
- What happens to upgrade or design center deposits if the sale falls through before closing
- Whether the financing contingency protects you if the builder's own preferred lender is the one that fails to deliver
- Whether the builder's incentives are contingent on using their in-house lender, and what you give up if you shop that loan elsewhere
A buyer's agent who reviews this paperwork before the signature, not after, is the difference between catching a problem clause and discovering it during a dispute.
A Few Questions Worth Asking Directly
Does every builder in Frisco skip the option period? Not universally. Terms vary by builder and sometimes by community within the same builder's portfolio. The only way to know is to read the specific contract in front of you rather than assume it mirrors a prior purchase.
Is a higher earnest money deposit on new construction normal, or a red flag? It is normal. Builder earnest money commonly runs 3 to 5 percent of the purchase price, well above the roughly 1 percent typical on a resale TREC contract. The percentage itself is not the concern. Whether it is refundable under a given scenario is.
Should I still use the builder's preferred lender for the incentive? Sometimes the credit is worth it, but compare the total cost, including the interest rate, against at least one outside lender before deciding, and understand what your contract says if that in-house lender fails to perform.
Buying new construction in Frisco means signing paper written by the builder, for the builder, and reading it that way from the start is what protects the money you put down. If you are comparing communities, comparing builders, or already have a contract in hand and want a second set of eyes on it before you sign, Michelle Gifford works these Frisco builder contracts regularly and can walk through the specific terms with you before you commit. Let's Connect.
This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.
