Key takeaways:
- Work with a builder who knows your area to avoid delays, unexpected costs, and regulatory issues.
- Review quality, process, and reputation by touring past projects and speaking with previous clients.
- Understand financing, services, and warranties to protect your investment and ensure a smooth build.
By Sherwin Loudermilk, founder and president of Loudermilk Homes
Designing and building a custom home is typically one of the most important financial decisions you will ever make, and it’s crucial to do your due diligence. Ask lots of questions, understand the complexities of the process, and talk with past clients and other professionals in the field before you choose the best custom home builder for your project.
In collaboration with Loudermilk Homes, this Redfin real estate guide spotlights a few things you should consider before deciding to build a custom home to help keep your project on time, on budget, and running smoothly.
1. Do they build in your area?
One of the first questions you should keep in mind when looking to build a custom home is whether the builder is active in your area, specifically the part of town or the neighborhood where you want to build your custom home.
A builder’s familiarity with the local market can directly impact your project’s timeline, cost, and overall quality. Builders who regularly work in your area are more likely to understand local zoning regulations, permit requirements, soil conditions, and neighborhood design standards.
They may also have established relationships with local suppliers and subcontractors, which can help streamline the construction process and reduce unexpected delays or expenses. Choosing a builder with strong local experience can help ensure your project runs more efficiently from planning through completion.
2. Do you trust the quality of their work?
Look carefully and closely at the quality of the workmanship of the home builder you choose. Ask to tour a home they recently completed, and speak with the homeowner about how the process went.
Ask the builder about their internal quality standards for things like drywall — for example, do they perform the “gold standard,” highest quality, Level 5 finish? Do they have documented processes for properly installing windows and doors so the sills are correctly sloped for water runoff and all surface areas are waterproofed? Do they use a more expensive and more effective multi-layer waterproofing system for the basement?
If energy efficiency and sustainability are important to you, ask the builder if they use top-rated Energy Star appliances and other materials that make your home efficient and reduce your long-term costs. For example, we also conduct “progressive value engineering” on every home we build to minimize the use of expensive materials such as engineered beams, shorten HVAC runs, and look for opportunities to stack walls to save money without compromising quality.
3. Do they have a clear, easy-to-understand process, and are they sophisticated users of technology?
Ask the builder about their process, and assess how well documented and easy to follow it is. Do they have checklists for pre-construction, job start, job completion, final walk-through, and other key phases?
At Loudermilk Homes, we developed a 9-Step “Process to Perfection” to educate homeowners and guide them through the entire design-and-build process. We also created Loudermilk Connect, an app that captures every detail about their project, including a 24/7 video feed of their home, daily work logs and photos, real-time schedule and budget updates, their architectural plans and engineering plans, all of their design selections, paint and stain colors, change order requests and approvals, and other key details.
We offer complete transparency, and that means sometimes you might see a little grease under the hood. If an inspection doesn’t pass, the client will see that information, along with our plan to fix the issue and when a new inspection will be scheduled.
4. Are they experienced in working with mortgage lenders?
Obtaining financing for your custom home is an important step, and companies like Rocket Mortgage make it easier than ever before to get pre-qualified and pre-approved for a mortgage. Pre-qualification helps you understand how much money you might be able to borrow, based on factors such as your income, debt ratios, and net worth. Pre-approval is a conditional offer from a lender pending final underwriting.
Many lenders will request specific documents from a builder, such as the draw schedules, detailed cost estimates, and other proof of your plans, so it’s important to choose a builder who is experienced, knowledgeable, and responsive in working with mortgage lenders.
When building a custom home, the two most common financing options are construction-to-permanent loans and construction-only loans, each with distinct structures and requirements.
Construction-to-permanent loan
This mortgage has a single closing process, and you typically pay interest only while the loan is being drawn down in phases by the builder when construction milestones are met, such as when framing is complete and when mechanicals are installed. When the home is completed, it converts to a traditional long-term mortgage, such as a 15-year or 30-year. It often requires a higher down payment, such as 20-25%, and there are stricter requirements for approval.
Construction-only loan
Also called Stand-Alone Loans, these loans only cover the construction phase, and the loan must be paid off in full when construction is complete. Then the homeowner takes out a new permanent long-term mortgage that typically covers the construction loan, effectively rolling the cost of construction into the new loan. This can be a good option if you think mortgage rates might go down in the future or if your financial situation will be stronger and you may qualify for better terms. One downside is that you will pay closing costs twice — once for the construction loan, and again for the permanent loan.
5. Do they offer in-house architecture and interior design services?
Having architectural designers, selection designers, and interior designers on the same team can make the entire process more efficient and streamlined. Because they work closely together, collaboration is more seamless, allowing for faster decisions, quick feedback, and smoother coordination throughout your project.
If you want to make changes to your custom home design, an in-house team can usually turn around those changes in a day or two, compared with weeks or even months for outside architects.
“Many years ago, we created an in-house architectural design team at Loudermilk Homes so we could be a one-stop shop when our clients design their dream home, make changes, and want to try out different design concepts,” Sherwin says. “We also offer selection design and interior design services through our sister company, Loudermilk Designs. Sometimes our clients feel a little overwhelmed and don’t know how to describe their design preferences, so we created a Design Questionnaire to reveal their unique design style. We start every project with an Inspiration discussion where we guide the client through overall look and design, color palettes, finishes and cabinets they prefer, and we create a Dream Board that serves as a guide for their entire project.”
6. Are they responsive, and do they seem easy to work with?
From initial inspiration and design to pre-construction, construction, final walk-through, taking possession, and ongoing warranty support, you will be working with this team for a solid two years and making thousands of decisions along the way.
Ask yourself: Does this builder seem easy to work with? Are they happy as a team? Do they listen to what you are saying? Will they help educate you on the process so you can invest wisely in important features that will make your home more functional and comfortable to support your family’s lifestyle? Essentially, you want your builder to be your consultant.
For example, if you entertain frequently, you may want large covered balconies, a second prep kitchen, a built-in bar, and an oversized dining room. If you host sleepovers for your children, you may want extra bunk beds with outlets to charge devices. Families with pets may want a dog washing station. We offer a design gallery with hundreds of inspiration photos that can help you bring your ideas to life.
7. Do they have a good reputation, and do they offer a good warranty program?
Speak with current and past clients to get candid feedback about their experience with the builder, including what went well, what could have been improved, how issues were handled, and what they would do differently if starting the process again.
Ask about the builder’s warranty program, which protects one of the biggest investments you will make in your lifetime, just in case there are any defects. Most builders offer a 1-2-10 warranty that covers workmanship and materials for 1 year, HVAC and other systems for 2 years, and structural elements for 10 years.
About the Author
Sherwin Loudermilk is the founder and president of Loudermilk Homes, a leading custom home design and build firm in Atlanta and North Carolina and a three-time finalist for Custom Home Builder of the Year by the National Association of Home Builders. He founded Loudermilk Homes in 2009 after spending the first part of his career at IBM and in commercial development. He serves as Treasurer and Secretary of the Greater Atlanta Homebuilders Association, the Board of Advisors for the Georgia Tech College of Design and School of Building Construction, and he is an official Mentor to students in the MBA program at Georgia State University.
English (US) · 