Important points:
To avoid delays, unexpected costs, and regulatory issues, work with a builder who is familiar with your area. Check out their quality, processes, and reputation by inspecting past projects and talking to previous clients. Understand financing, services, and warranties to protect your investment and ensure a smooth build.
Written 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 is extremely important to do your due diligence. Before choosing the best custom home builder for your project, ask lots of questions, understand the intricacies of the process, and talk with past clients and other professionals in the field.
This Redfin real estate guide, in collaboration with Loudermilk Homes, highlights some of the things to consider before building a custom home to help you keep your project on time, on budget, and smoothly.
1. Is it being built in your area?
One of the first questions to keep in mind when looking to build a custom home is whether the builder is active in your area, specifically the town or neighborhood where you want to build your custom home.
A builder’s familiarity with the local market can directly impact a project’s schedule, cost, and overall quality. A contractor who regularly works in your area is more likely to understand local zoning regulations, permitting requirements, soil conditions, and neighborhood design standards.
We may also have established relationships with local suppliers and subcontractors, which can streamline the construction process and reduce unexpected delays and expenses. Choosing a contractor with extensive local experience will help you run your project more efficiently from planning to completion.
2. Do you trust the quality of their work?
Look carefully and closely at the quality of workmanship of the home builder you choose. Tour recently completed homes and hear from homeowners about how the process went.
Ask your builder about their in-house quality standards for things like drywall. For example, do they have a “gold standard”, top-quality, Level 5 finish? Is there a documented process for properly installing windows and doors, properly sloping sills for water flow, and waterproofing all surface areas? Are more expensive and effective multi-layer waterproofing systems used in basements?
If energy efficiency and sustainability are important to you, ask your builder if they use top-rated Energy Star appliances and other materials that make your home more efficient and reduce long-term costs. For example, we implement “progressive value engineering” in every home we build, minimizing the use of expensive materials such as engineered beams, reducing HVAC runtime, and seeking opportunities to stack walls to save money without compromising quality.
3. Do they have clear and easy to understand processes? Are they advanced users of technology?
Ask your builder questions about the process and assess how well documented and easy to understand it is. Do you have a checklist for pre-construction, start of work, completion of work, final walk-through, and other important stages?
At Loudermilk Homes, we have developed a 9-step Process to Perfection to educate homeowners and guide them through the entire design and construction process. We also created an app called Loudermilk Connect. It’s an app that captures every detail about your project, including a 24/7 video feed of your home, daily work logs and photos, real-time schedule and budget updates, architectural and engineering plans, all design choices, paint and stain colors, change order requests and approvals, and other important details.
We offer complete transparency, which means you may see a little bit of grease under the hood. If the inspection fails, the client will be provided with that information, along with a plan to resolve the problem and schedule a new inspection.
4. Do you have experience working with mortgage lenders?
Obtaining financing for a custom home is an important step, and companies like Rocket Mortgage are making it easier than ever to get pre-qualified and pre-approved for a mortgage. Prequalification can help you understand how much money you can borrow based on factors such as your income, debt-to-equity ratio, and net worth. Pre-approval is a conditional offer from a lender while you wait for final underwriting.
Many lenders require specific documentation from the builder, such as drawing schedules, detailed cost estimates, and other proof of plans, so it’s important to choose a builder who is experienced, knowledgeable, and responsive when 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 different structures and requirements.
Loans from construction to permanent
This mortgage has a one-time closing process, and you typically pay only interest while the loan is drawn down by the builder in stages as construction milestones are achieved, such as when the framework is completed or machinery is installed. Once the home is completed, it converts to a traditional long-term mortgage, such as a 15-year or 30-year term. They often require a higher down payment, such as 20 to 25 percent, and have more stringent requirements for approval.
Construction loan
Also known as stand-alone loans, these loans cover only the construction phase and require full repayment of the loan upon completion of construction. The homeowner then typically takes out a new permanent, long-term mortgage that covers the construction loan, effectively rolling the construction costs into the new loan. This may be a good option if you think mortgage rates may fall in the future, or if your financial situation improves and you may be able to get better terms. One drawback is that you will pay closing costs twice. The first is a construction loan and the second is a permanent loan.
5. Do you offer in-house architectural and interior design services?
Having the architectural designer, selection designer, and interior designer on the same team makes the entire process more efficient and streamlined. They work closely together to make collaboration more seamless, enabling faster decision-making, faster feedback, and smoother coordination across projects.
If you want to make changes to the design of your custom home, an in-house team can usually make changes within a day or two, while an external architect can take weeks or even months.
“Years ago, we established an in-house architectural design team at Loudermilk Homes so that we could be a one-stop shop for our customers when they wanted to design their dream home, make changes, and try different design concepts,” says Sherwin. “Our sister company Loudermilk Through Designs, we also offer selection design and interior design services. Sometimes our clients feel a little overwhelmed and don’t know how to describe their design preferences. That’s why we’ve created a design questionnaire to help uncover their unique design style. We start every project with an inspiration discussion, guide our clients through the overall look and design, their preferred finishes and cabinetry, and create a dream board to serve as a guide throughout the project.”
6. Is it responsive? Does it seem easy to handle?
From initial inspiration and design, through preconstruction, construction, final walk-through, ownership acquisition, and ongoing warranty support, you’ll work closely 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? Are they listening to you? Will they educate you about 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 a large covered balcony, a second prep kitchen, a built-in bar, and a large dining room. If you’re hosting a sleepover for your kids, you may need an extra bunk bed with outlets to charge devices. Families with pets may want to have a dog washing station. We offer a design gallery with hundreds of inspiration photos to help bring your ideas to life.
7. Does the company have a good reputation and offer a comprehensive warranty program?
You can talk to current and past clients and get honest feedback about their experience with the builder, including what went well, what could have been improved, how issues were handled, and what would happen if you started the process again.
Ask about a builder’s warranty program that protects one of the biggest investments of your life in case something goes wrong. Most builders offer a 1-2-10 warranty that covers workmanship and materials for one year, HVAC and other systems for two 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 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 in commercial development with IBM. He serves as Treasurer and Secretary of the Greater Atlanta Home Builders Association, on the advisory board of Georgia Tech’s College of Design and School of Architecture and Construction, and is an official mentor for students in Georgia State University’s MBA program.
