7 Things to Consider Before Building a Custom Home

Key Takeaways:

• Work with a builder who knows your area to avoid delays, unexpected costs and regulatory issues.
• Assess quality, process and reputation by touring projects and talking to previous customers.
• Gain insight into financing, services and warranties to protect your investment and ensure smooth construction.

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’ll ever make, and it’s critical to do your due diligence. Ask plenty of questions, understand the complexities of the process, and talk to previous clients and other professionals in the field before choosing the best custom home builder for your project.

In collaboration with Loudermilk Housesthis real estate guide from Redfin highlights some of the things you should consider before deciding to build a custom home to ensure your project goes on time, on budget, and smoothly.

1. Are they building near you?

One of the first questions you should keep in mind when building a custom home is whether the builder operates in your area, specifically the part of town or neighborhood where you want to build your custom home.

A builder’s familiarity with the local market can have a direct impact on the timeline, cost and overall quality of your project. Builders who regularly work in your region understand the local situation better zoning regulationspermit requirements, soil conditions and neighborhood design standards.

They may also have built relationships with local suppliers and subcontractors, which can help streamline the construction process and reduce unexpected delays or costs. Choosing a builder with strong local experience can ensure your project runs more efficiently, from planning to completion.

2. Are you confident in the quality of their work?

Look carefully at the quality of workmanship of the home builder you choose. Ask for it view a house that 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 meet the ‘gold standard’, highest quality, level 5 finish? Do they have documented processes for properly installing windows and doors so that the sills are properly sloped to allow water to drain and all surfaces are watertight? Are they using a more expensive and effective multi-layer basement waterproofing system?

If energy efficiency and durability are important to you, ask the builder if he uses high-quality Energy Star appliances and other materials that will make your home efficient and lower your costs in the long run. For example, we also perform progressive value engineering on every home we build to minimize the use of expensive materials like composite beams, shorten HVAC runs, and look for opportunities to stack walls to save money without sacrificing quality.

3. Do they have a clear, easy-to-understand process and are they advanced 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 preparation, job start, job completion, final walk-through, and other important phases?

At Loudermilk Homes we have one 9-step “Process to perfection” to educate homeowners and guide them through the entire design and construction process. We have also created Loudermilk Connectan app that captures every detail of their project, including a 24/7 video feed of their home, daily work logs and photos, real-time schedule and budget updates, their architectural and engineering plans, all of their design selections, paint and stain colors, change order requests and approvals, and other important details.

We offer complete transparency and that means that sometimes there is a little fat under the hood. If an inspection fails, the customer will be presented with that information, along with our plan to resolve the issue and when a new inspection will be scheduled.

4. Do they have experience 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-qualifying helps you understand how much money you may be able to borrow, based on factors such as your income, debt ratios and assets. Pre-approval is a conditional offer from a lender pending final acceptance.

Many lenders will request specific documents from a builder, such as drawing schedules, detailed cost estimates and other evidence 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: from construction to permanent loans and loans for construction onlyeach with different structures and requirements.

From construction to permanent loan

This mortgage has one closing process and you typically only pay interest while the loan is drawn down by the builder in stages as construction milestones are met, such as when the framing is completed and when the mechanicals are installed. When the home is ready, it is converted to a traditional mortgage with a long term, such as a 15 or 30 year mortgage. Often a higher down payment is required, for example 20-25%, and there are stricter approval requirements.

Construction loan only

These loans, also called Stand-Alone Loans, cover only the construction phase and the loan must be paid off in full when construction is completed. The homeowner then takes out a new long-term permanent mortgage that typically covers the construction loan, effectively rolling construction costs into the new loan. This may be a good option if you think mortgage rates will drop in the future or if your financial situation is strengthening and you may qualify for better terms. A disadvantage is that you have to 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?

When architectural designers, selection designers and interior designers are on the same team, the entire process can become more efficient and streamlined. Because they work closely together, collaboration is smoother, allowing for faster decisions, quick feedback, and smoother coordination throughout your project.

If you need to make changes to your custom home design, an in-house team can typically make these changes in a day or two, compared to weeks or even months for outside architects.

“Many years ago, we created an in-house architectural design team at Loudermilk Homes so that we could be a one-stop shop when our clients are designing their dream home, making changes and wanting to try out different design concepts,” says Sherwin. “Through our sister company we also offer selection design and interior design services, Loudermilk Designs. Sometimes our customers feel a little overwhelmed and don’t know how to describe their design preferences, so we have a Design questionnaire to reveal their unique design style. We start each project with an inspirational conversation where we guide the client through the overall look and design, color palettes, finishes and cabinetry they prefer, and we create a Dream Board that will guide their entire project.”

6. Are they responsive and seem easy to work with?

From initial inspiration and design to pre-construction, construction, final walk-through, occupancy and ongoing warranty support, you will work with this team for two years and make 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 say? Will they help you understand the process so you can invest wisely in key features that will make your home more functional and comfortable, supporting your family’s lifestyle? Essentially, you want your builder to be your advisor.

For example, if you regularly entertain guests, you may want large covered balconies, a second prep kitchen, a built-in bar, and an oversized dining room. If you’re hosting sleepovers for your kids, you may want extra bunk beds with electrical outlets to charge devices. Families with pets may want a dog wash station. We offer a design gallery of hundreds of inspiration photos that can help you bring your ideas to life.

7. Do they have a good reputation and offer a good warranty program?

Talk to current and past customers 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 they started the process again.

Ask about the builder’s warranty program, which protects one of the largest investments you’ll make in your life in the event of 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 construction company 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 early part of his career in IBM and 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 for students in the MBA program at Georgia State University.