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The Definitive Guide to Building a Custom Home
A guide for those who plan to build their first custom home in the Mid-Atlantic
The Definitive Guide to Building a Custom Home
Building a custom home is among the most coveted opportunities — one for which many can only dream.
And for the prospective custom home owner, the process of finding a lot to build your custom home, developing building plans, navigating construction, and decorating your home will all be part of a process that is both comprehensive and thoroughly rewarding.
For the uninitiated, building a custom home poses a few key questions:
How much will a custom home cost to build?
How do I find a good custom home builder?
Where is a good place to build a custom home?
In this guide, we hope to answer all of these questions and more.
But before we dive in to the best way to approach building a custom home, let’s answer the most fundamental question: What is a custom home?
What is a custom home?
As we will soon see, a custom home is a decidedly different product and experience.
As an example, a custom home is sometimes confused with a production home, where a specific home site and design has already been built by a large real estate developer, with light finishes to be determined by the end user upon purchase.
Such production homes can be nice and — in theory — possess virtually every ideal and aspiration behind that of a true custom home. However, production homes are typically homogenous in design — and in spirit — as they feature common building materials, appliances, and building styles which are selected based on a business model created by the real estate developer.
Further, production homes are often built in the context of a Home Owners Association (HOA) and come with various restrictive covenants and bylaws the home owner must adhere to before, during, and after the home has been built.
For someone who aspires to build a true custom home, one benefit is the freedom to make decisions around details both big and small. And with production homes, those benefits are often compromised in favor of the priorities of the real estate developer’s economies of scale and her pro forma.
Another common point of confusion among those considering a custom home is that of the spec home, which is a type of new construction home.
A spec home is often created by a custom home builder or real estate developer based on the perceived tastes of an end user persona — a customer who has not necessarily contracted a residential architect or custom home builder to create the home for themselves, but is likely in the marketplace for a certain type of home based on the builder or developers knowledge of the local market area and buyer demographics.
While spec homes can also be quite nice, they are similar to a production homes in that they were not created with the exact tastes and standards of the end user — and are often contingent on the developer’s end goals.
In short, various types of “new” homes such as production homes and spec homes are not to be confused with a true custom home, primarily because there is less control, less decision making, and less opportunity to imbue your specific tastes and desires into the end product.
Indeed, the benefit of building a custom home is that every decision is yours.
From deciding interior finishes and fixtures to the size of your home site, building a custom home requires a level of dedication, focus, and perseverance that is often muted by the other options we just mentioned.
So, are you still ready to build your custom home?
If the answer is yes, let’s get started.
Magothy River Modern of Arnold, Maryland. Image courtesy of David Burroughs.
Financing your custom home: How much does it cost to build a custom home?
Let’s get right to it: Building a custom home is often more expensive than buying an existing home, including production homes and spec homes.
Put another way, buying “new” is often more expensive than buying resale.
Further, the financing options for building a custom home are often more strict than more conventional lending options.
One major reason that building a custom home is more expensive is because of the additional steps required to build a custom home: acquiring the land on which to build, the cost to prepare the land for construction, as well as the labor, materials, and various fees required to complete the build.
So what are the options when financing your custom home?
For some, the financing of a custom home may come down to simply cutting a check. If you are paying cash for your custom home, feel free to skip to the next phase: Finding land for your custom home.
For the rest of us, building a custom home will involve working with a lender.
Financing a custom home typically involves two major cost centers: land acquisition costs and the the cost of construction.
So before you start creating architectural drawings and making offers on land, contact a local lender to review your financial situation and explore loan products for building a custom home.
More often than not, a trusted local lender will not only have the right loan product, but will also be able to help you understand exactly “how much” home you can afford.
Further, a trusted local lender will help you navigate certain intricacies of the lending process, including appraisals and draws.
What is a Construction Loan?
So, what kind of loan products are available for those seeking to build a custom home? Perhaps the most common is the Construction Loan.
A Construction Loan — sometimes referred to as a Construction-to-Permanent loan — is perhaps the most popular offering for those aspiring to build a custom home, primarily because the consumer obtains a loan that includes the cost to acquire land and those associated with the custom home build.
Another option many aspiring custom home owners pursue is acquiring financing through an in-house program offered by a custom home builder or a real estate developer.
While an in-house financing option can include enticing financing options — such as a more competitive interest rate or a lower downpayment requirement — it’s usually recommended to separate the source of financing of your custom home from the source of construction and design.
Considerations for Construction Loans
One thing to consider when looking at construction loans are timelines. Most construction loans require a contract with a builder that is licensed and insured, building plans, and building permits. Further, construction loans are often based on a pre-determined timeline — typically around 18 months. A benefit of construction loans is that the consumer often makes interest only payments for the duration of construction. Then, upon completion of the custom home, the loan is rolled over into a permanent product, such as a 30 year fixed mortgage.
It’s worth noting, some custom home builders may have their own preferred lender to finance construction. Sometimes, these lenders are owned by the custom home builder — or have established a formal business partnership. While “in-house” financing may present appetizing options for the prospective home owner in terms of lower interest rates or more favorable lending standards, it’s worth considering a third party lender who not only has experience in administering and financing new construction, but also can serve as a worthwhile advocate during the construction process.
Another consideration when financing the construction of your custom home is the appraisal process.
As an example, let’s say you are building a custom home in a suburban neighborhood that has 2,000 square foot ranchers built in the 1960s and you are going to tear one down to build a 5,000 square foot contemporary home. You want to tear down the existing home and work with a lender to finance construction with a construction loan.
Before the lender will approve your loan, they will go through an appraisal process where a third party agency will assess the value of comparable homes nearby to underwrite the potential value of your new home. In certain cases, the appraised value of your new home may not align with the value of comparable homes nearby.
When there is a significant discrepancy between the market rate of comparable homes and your new home, you could run in to an appraisal gap, which means you — the consumer — may have to come up with additional cash to finance the construction of your custom home (or you will have to find a second source of funds from another lender to fill the gap).
In most cases, an appraisal gap is something you can address collaboratively with your lender and the design professionals you hire.
As you can see, the financing element of building a custom home is quite important. Further, it’s entirely feasible to find land and a design professional to build your home first before even exploring financing — especially if you already own the land or are paying cash.
However, once you’ve had a chance to consult with a trusted lender to explore options that best fit your financial situation and can accommodate the various nuances of building a custom home, you can make the determination: Is building a custom home right for me?
If the answer is yes, the fun begins.
Westwood of Vienna, Virginia. Image courtesy of Erik Kvalsvik.
Finding Land for Your Custom Home
Acquiring land is an important element to building a custom home.
Of course, if you already own land and are ready to build your custom home, you may be ready to find a design professional.
When searching for land to build your custom home, there are three primary paths:
Acquiring raw land on the open market
Acquiring a lot from a custom home builder or real estate developer
Acquiring a lot with an existing home which you will tear down or renovate
With each option, there are several important elements to consider.
First, when acquiring raw land, there is likely work that needs to be done for it to become hospitable, including bringing water, electric, and various utilities to the site.
Known as site work, the land may need to be cleared and engineered to remove trees, brush, and even an existing structure to create practical elements like a driveway to access to future home site.
Finally, the land you have identified may have unique or regionally-specific zoning requirements in place, so speaking with your local zoning authority to ensure adequate requirements are in place to support a residential use.
As an example, for those seeking to build a waterfront home, there are a number of very specific requirements that must be in place before construction can even begin, all of which are designed to ensure the safety and protection of nearby waterways such as the Chesapeake Bay.
In either case, when buying land for your custom home, it’s important to consider the cost to acquire the land as well as the development costs needed to make it a build-ready home site.
Here are a few common questions to answer when considering a parcel of land for your custom home:
Who owns the land?
Who are the neighbors? And what is the condition of their home site?
What specific improvements are required to make the land hospitable (i.e. water, electric, internet, foundation, driveway, etc.)
Is the property zoned for residential use? If not, was the land previously used for a non-residential purpose, like as a gas station or industrial site that could pose environmental concerns?
Is the land in a dense urban area or in a remote rural location where it will be difficult to access utilities, internet, schools, and hospitals?
Is your land within a Home Owner’s Association (HOA) or planned community?
Is your building lot and floor plan comparable to other lots in the neighborhood?
Are there any specific restrictive covenants or easements that may inhibit you from building the custom home of your dreams?
How does the sun and other weather elements effect the viability of prospective homesite? As an example, when it rains is there excessive pooling of water in a certain area — or run off to a neighboring property?
Is the land you are building your home within any specific areas that may cause future harm or danger, such as being within a FEMA Flood Zone, an EPA Superfund Site, or in the path of a major development that may change the character of the neighborhood or landscape?
As you can see, when purchasing land to build your custom home there are some considerations that are fairly straightforward while others are more complex.
In terms of cost, there are a number of levers that push price higher or lower.
As an example, the closer the land is to dense urban environments chances are the more costly the land will be to purchase due to its proximity to popular amenities like schools and employment centers as well as public transportation. Further, land tends to be more valuable if existing utilities are currently available, such as water, sewer, and electric. In such cases where acquiring land may be competitive, discuss with your real estate agent ways to craft a competitive offer.
“A good real estate agent will have many techniques they can employ to craft a competitive offer for their buyer clients,” says Byron V. Hughey, Vice President at TTR Sotheby’s International Realty in The Plains, Virginia.
“As an example, when competing for a lot in a popular neighborhood, employing techniques like an escalation clause can help ensure your client stays competitive in a multiple offer situation. Additionally, if a parcel of land is not readily available, real estate agents may employ proactive outreach to to solicit off market opportunities, such as properties whose owners live out of state.”
Conversely, land in a more remote and challenging environment — or land that is considered raw or “undeveloped” land — may be able to be purchased for less upfront, but may result in significant development costs that could push the all-in cost of your custom home beyond what you may have originally considered.
Fortunately, for those considering acquiring land for their custom home, there are several resources to consider.
The first and perhaps most obvious person to consider speaking to when considering the purchase of land is a licensed real estate agent.
A licensed real estate agent should have a demonstrated track record of sales in your target neighborhood, a network of local experts who can help determine the viability of the potential homesite (such as civil engineers and local permitting officials), and data-driven insights that offer a understanding of the associated market value of the land you are considering purchasing. In addition, a great real estate agent will also know of private or off-market opportunities that may not be readily available to the larger marketplace.
“A good agent will present a number of options,” says Hughey.
“Whether you want to purchase land yourself or work with a custom home builder or developer who may have a build-ready lot for sale, your agent should service as a concierge to help you navigate the best path forward and provide you with connections to trusted subject-matter experts who can help you validate your concept throughout the process.”
As noted, a popular path for aspiring custom home owners is to purchase land directly from a custom home builder, who will acquire a parcel of land, subdivide and develop the land into a build-ready lot, and then sell the lot back to the end-user.
“For many, buying a lot directly from a custom home builder is a great way to find a lot with out the hassle of having to procure and develop it yourself,” says Hughey.
Finally, when considering land, you may be able to find a great opportunity with a lot that already has a home or structure on it. '
“Sometimes, you may be able to find a good deal with a property that is not marketed properly by the listing agent. As an example, a tear down in a great neighborhood may only show up on search results for those seeking single family homes rather than just land,” says Hughey.
“Often, these can be amazing opportunities for aspiring custom home owners, as you can explore a complete tear down or a whole home renovation.”
For most aspiring custom home owners, finding land is one of the most important elements you can consider, and should not be taken lightly.
While you can make a ton of customizations to your home, it’s hard to change the location of the land upon which it sits.
Poplar Grove of Capitol Hill, Washington, D.C. Image courtesy of Ty Cole.
Hiring a Design Professional to Create Your Custom Home
As you work with a licensed real estate agent to acquire a plot of land and a local lender to understand your desired financing options, it’s now time to engage with a design professional who can help build your custom home.
There are many approaches to finding a design professional to build your custom home, each of which offers its own benefits and downsides.
Engage with a licensed architect who can draw plans, pull permits, and engage with a custom home builder to facilitate construction
Engage with a design-build firm that bundles the role of architect and custom home builder into one engagement
For the purpose of this guide, we will recommend engaging with a licensed architect who can serve as the quarterback of your custom home build.
Finding an Architect
An architect is a licensed professional who will bring your vision of a custom home into reality via the preparation and delivery of schematic designs and construction documentation, and more.
Further, an architect has the ability to pull the appropriate permits needed to facilitate construction and can help source a custom home builder who will typically bring specialist sub-contractors and trades into the fold to manage and oversee the construction of your custom home.
When brought in early in the process, an architect should also be able to consult on the efficacy of your prospective home site alongside your licensed real estate agent and other specialists, like a surveyor or a civil engineer.
For those working with a lender for financing, an architect can serve as a key resource during the appraisal process by articulating building plans, renderings, and design specifications that are critical to the underwriting and appraisal process.
Finally, an architect will also be of use during the process of construction administration, where advocacy, coordination, and collaboration between you, your custom home builder, and various trades and sub-contractors is critical.
In short, when building a custom home, engaging with a licensed architect will help provide form to the process of building your custom home.
To find the best architect to design your custom home, it’s important the architect is first licensed in the state in which you want to build.
With local licensing requirements differing from location to location, it’s important to ensure licensing requirements are in place prior to contracting with an architect.
Next, it’s important to see previous projects your architect has completed. This will be particularly important if you are seeking a specific style of home, such as a modern home or a waterfront home.
Indeed, an architect should be more than willing to create a unique design for your custom home, and should also be open to referring you to other clients with whom they have worked in the past.
Finally, an architect should have a clear fee structure and engagement plan that is easy to understand and clearly defined in writing.
Typically, an architect will charge some sort of down payment as well as a percentage of the total build cost of your custom home. Other architects, however, may simply charge a flat fee or a retainer fee based on specific phases of the project. In either case, understanding the cost and scope of your relationship will be key.
Finding a Custom Home Builder
As noted earlier, when collaborating with an architect you will need to also hire a custom home builder — sometimes referred to as a general contractor.
A custom home builder often holds a contractor license, which validates their technical and financial ability do complete the construction of a custom home, as well as the ability to hire sub-contractors under her direct supervision.
So while your architect will help you draft plans and design the overall home, it’s not until a custom home builder has given her input that a realistic timeline and budget for the project (as well as developing a takeoff to articulate the various materials needed) can be truly valid.
As you begin to narrow down your choice of a custom home builder, consider the same process you went through when finding your architect.
Are they licensed in the state you wish to build your custom home?
Does your custom home builder have a body of work that aligns with your desired style and quality?
Have you been able to connect with past customers to hear their experience with the custom home builder?
Does your custom home builder have a clear fee structure and a coherent strategy to execute the project, including a specific budget for the project and a timeline with dependencies, a list of sub-contractors that she will hire for the project, and a plan to address change orders and lien releases?
What kind of warranty does the custom home builder offer? How will they address issues that may arise once the project is completed?
And perhaps most importantly, does your custom home builder have a record of working collaboratively with your architect?
Custom home builders come in many shapes and sizes, some operating as sole proprietors and consultants that manage sub-contractors and specialty trades, while others offer a more comprehensive in-house team which include project managers, site superintendents, specialty trades such as carpentry and millwork, and more.
For those deciding on which option to choose, consult with your architect and your lender.
Finding Design Specialists and Specialty Trades
As you can see, some of the most important elements of a custom home often lie in the details. And herein lies perhaps the most important rule of them all: When building a custom home, there is a major benefit to hiring specialists.
Under this continuum, the more specialist involvement throughout the build process the higher the likelihood the quality of your custom home will meet or exceed your standards.
One common area where the process of building a custom home can go awry is choosing interior and exterior finishes, such as doors, windows, appliances, and paint.
Where an architect or a custom home builder may have a perspective on these details, an interior designer may be best suited to address this specific project, and can work hand in hand with architects and custom home builders to help elevate functional areas of the home.
So while your architect or a custom home builder may have ideas about which color scheme or lighting design will go well with your desired home style and aesthetic, chances are a more “out of the box” option may be the default option unless selected well in advance.
Another example of specialist value is in site design and landscaping. As a major feature of your custom home, landscape architecture and landscape design can come with serious considerations that are almost always best left to licensed professionals. Whether it be the location of a home site in relation to a nearby water feature such as a river or creek, the optimal location for a pool or water feature, or the best plantings to choose for the local environment, the wise counsel of a landscape architect can pay dividends down the road.
A common question many prospective custom home owners have to consider is the desire to achieve your dream home for the lowest possible cost.
While the involvement of specialty trades and experts can certainly increase the “soft” costs of your custom home, upfront guidance and expertise can create incredible efficiencies in the more deliberate “hard” costs associated with the project.
Some ways to employ value engineering and cost savings when building a custom home include:
Engaging with a custom home builder directly and hiring an architect or owner’s representative to provide oversight and advocacy during the construction process
Hiring licensed design professionals and subject matter experts early in the process of building your custom home to validate the building plans, site preparation, and more.
Is your custom home builder in a financially stable situation — do they have a line of credit or a history of bankruptcy and lawsuits with previous clients?
Building your custom home on an existing residential footprint, perhaps where a previous home site existed.
Choosing a home site that has utilities that are readily accessible and is relatively free of brush, debris, challenging topographies and soils.
Building up, not out, to minimize the physical footprint of the home’s foundation and roofline
Opting for minimal landscaping and hardscaping upfront
Ask your custom home builder how they source building materials and estimate quantities when placing orders, as well as their approach to value engineering with regards to quality versus cost.
Opting for more modest appliances and finishes, which can be updated or enhanced down the road
Designing an energy-efficient building envelope, and choosing energy-efficient windows and HVAC systems
Opting for a more traditional home design, rather than something that is truly bespoke.
Ensuring payments are only based on services rendered, and leveraging your lender to help make this process more efficient.
Group wet rooms closer together, so plumbing and utilities can be stacked
Ensure your custom home builder has a home warranty to address any repairs and maintenance required following move-in.
Work with your architect or owner’s representative to request proposals from at least three custom home builders to obtain rates and a basic idea of their process and timeline.
As you can see, there are many considerations for choosing a design professional to build your custom home.
But once you do, the process of designing your home can begin.
Chestertown Modern of Chestertown, Maryland. Image courtesy of Durston Saylor.
Construction Administration
Once you have selected an architect and a custom home builder to lead the construction process — have secured financing from your lender based on a pre-determined timeline, budget, and building plans — it’s time to begin the process of building your home.
Since we are using an architect as our project lead, we will carry forward with that example as we enter the process building your custom home.
During this phase, it’s common to have regular on-site meetings with key members of your team, including the review of any specific Change Orders that need to be approved, a takeoff to ensure all materials are ordered and being delivered to the project site in a timely manner and to the quality expected, as well as ensuring payment is delivered to sub-contractors and specialty trades upon completion of work.
Recall, if your custom home build is being funded through a construction loan, payment will be distributed from the lender to your custom home builder according to a draw schedule. Draws are distributions made to the custom home builder based on major mile markers that occur during the construction process.
Should the completed work meet the specifications and standards of the lender’s representative, payment will be issued to the custom home builder and distributed to relevant subcontractors accordingly. If the work does not meet the standards and specifications of the lender, however, the custom home builder will be on the hook to complete the work or remedy the situation to earn the draw.
Below are the high level phases of Construction Administration, with common points of inspection and review noted for those working with a lender.
Phase 1: Site Design
Site Design and Permitting effectively begins the construction process and includes clearing brush and demolishing any existing non-essential structures. By this time, building permits and plans should already be finalized, as should the budget and draw schedule with your lender. A structural engineer may be brought in during this phase to determine the best placement of the home structure, and make note of any specific issues relating to drainage and utilities that may need to be considered. A landscape architect may also be useful at this stage to confirm the site design aligns with the larger vision for the home site, including where essential plantings and hardscape details such as a pool or driveway may go.
Phase 2: Foundation - Inspection
-After Site Design is complete, your custom home builder will begin laying the foundation. In certain cases, the home site may have an existing structure, in which case a foundation may need to be altered or expanded. In other cases, a new foundation may need to be created. During this phase of construction, your first inspection with your lender is typically conducted. Assuming no issues are noted, construction may continue.
Phase 3: Framing
During the Framing phase, the home is starting to come together as a basic structure on top of your newly completed foundation. Framing offers the first real opportunity to experience your custom home as a physical reflection of your building plans, with notes and markers set for specialty trades later in the process.
Phase 4: Electric, Plumbing and HVAC - Inspection
After Framing is complete, electric systems, plumbing systems, and heating, ventilation, and air conditioning (HVAC) systems are installed. During this phase, your custom home is starting developing its central nervous system, so to speak and is often where the second critical inspection happens with your custom home builder and your lender. During this phase, it may be wise to ensure the placement of elements like internet and phone jacks.
Phase 5: Insulation and Drywall
Following the installation of your electric, plumbing, and HVAC systems, your custom home builder will install your insulation and drywall.
Phase 6: Interior Finishes
Once Insulation and Drywall are installed, your custom home builder will begin completing the interior of your home. Durign this phase, appliances such as refrigerators and washing machines are installed, as are more fine architectural details such as lighting fixtures, crown molding, and plaster work.
Phase 7: Exterior Finishes and Landscaping
During the process of installing interior finishes, your custom home builder is also likely focusing her attention to exterior finishes and landscaping. During this phase, a Landscape Architect and Landscape Designer may be employed to begin installing grass, plantings, and other decorative vegetation, such as trees and mulch, as well as hardscape details such as a driveway, walkway, patios and pools.
Phase 7: Pre-Completion Date Walkthrough
During these final phases of construction, usually two days before your contracted Completion Date, a Pre-Completion Date Walkthrough is scheduled. During this phase, you are going to thoroughly inspect your custom home with your custom home builder, your architect, and your lender’s representative. During this phase, you are looking for any major issues that may prevent a Certificate of Occupancy from being issued, as well as any work that is still to be completed — or has been completed but to unacceptable standards.
During this phase, it’s common to find issues that may need to be addressed, such as a loose door knob or a faucet that is leaking. If this is the case, your custom home builder should have a very clear plan to address the issues while you prepare to move in. During this phase, it’s also appropriate to discuss in greater detail your home warranty. You will want to know what specific items are covered under the warranty, versus things that may not be covered and should instead be addressed before your Completion Date. As you can imagine, if there are significant issues preventing you from moving in — or preventing the county from issuing a Certificate of Occupancy — your custom home builder will be incentivized to fix them as they will not receive their final draw from your lender.
Of course, during the process of building a custom home there will undoubtedly be various adjustments, roadblocks, and revisions to the original plan.
During these moments, your architect, your custom home builder, and your lender should discuss these proposed adjustments and, if agreeable, issue a Change Orders or an amendment to the original contract.
Hunt Country Cabin of Middleburg, Virginia. Image courtesy of Peak Visuals.
Settling In to Your Custom Home
The day has come.
Your Completion Date has arrived, your Certificate of Occupancy has been issued, and your lender has re-characterized your construction loan to a permanent loan, such as a 30 year fixed mortgage.
Once construction is complete, it’s typical that home owners are eager to schedule the moving truck and get settled into the home immediately.
However, there are a few final details that are important to cover before doing so — many of which are likely outlined in your contract with your custom home builder.
Final Inspections
Before you move in, but after your Completion Date — usually no later than five (5) business days prior — a Final Inspection is conducted where a document known as an Inspection Report or a Punch List is created to articulate items needing additional attention, such as any lingering workmanship. Typically, any of these items will be covered by your Home Warranty.
Switch Utilities and Mail Forwarding
Before you move in, it’s also important to consider the status of your essential home utilities, like cable and internet. Consider setting up USPS mail forwarding at this time to ensure any mail you were receiving at your previous address is now being sent to your new address while you update personal contact information.
Understand Home Warranties, including Builder’s Warranties and Manufacturer’s Warranties
As noted earlier, as you navigate your Final Inspection with your custom home builder, make sure you understand which items your custom home builder is responsible for curing and which items specified for the product manufacturer.
Often, your custom home builder will offer a 10 Year Major Structural Defect (MSD) Warranty. These warranties are very common and cover a variety of potential issues that could come up over the course of your occupancy in your new home. Typically, a 10 Year MSD Warranty will cover workmanship and materials during the first year of occupancy, selected portions of the mechanical systems, such as HVAC and plumbing, over the first two years of occupancy, and major structural components such as your home’s foundation over the first ten years of occupancy.
Additionally, it’s common for custom home builders to offer handyman services following move in to include maintenance and service requests that may not be covered by your builder’s warranty or manufacturer’s warranties, such as landscaping services, paint touch ups, and more.
Creating Your Healthy Home
Before you move in and formally occupy the home, it’s worth considering certain environmental conditions of your new home.
As an example, common artifacts of construction such as sawdust should not be on premise, nor should extra building materials or machinery. In general, your living environment should be considered “broom clean” by the time of your Completion Date.
Another reason for delaying your move in date is to allow for things like paint and stain on hardwood floors to properly cure.
Because building materials can have harsh chemicals that can permeate the home for several weeks after their application, it’s recommended to have a rigorous approach to air ventilation prior to move in to ensure additional building materials have had a chance to properly off-gas and cure.
Ask your custom home builder in anticipation of your Completion Date about best practices for ensuring a clean, hospitable, and environmentally friendly approach to move in. Even if your custom home is delivered in perfect form, it may be worth having a cleaning crew come through to create a fresh environment.
Know Your Rights
Of course, if you feel your custom home builder or any licensed professional who was sub-contracted to work on your home has not completed the job up to your standards — or perhaps operated in an unethical or potentially criminal manner — it’s important to understand your rights.
First, reach out directly to your architect or custom home builder to articulate the issue in writing. Usually, if there is suspicion of foul play, they will be the first to jump to action to try to remedy the situation, usually by hiring a new sub-contractor to complete the work. However, in certain cases, there may be larger issues that would be costly to repair, or that the custom home builder will not take responsibility for. In such cases, it’s recommended to reach out to the state licensing board for which your custom home builder is a member to learn about recovery funds to reclaim funds lost or mismanaged during the process of construction, as well as your best course of action to remediate the issue. While these recovery funds vary by state, they are all in place to protect consumers from bad actors.
Understand Your Tax Implications
A common concern for new home owners happens when property taxes are due. As an example, if you purchased raw land and then developed a new residential home on it, the county will likely impose a new appraised value on the property, thereby increasing your real estate tax obligation going forward. While this is something that makes sense on paper, it can sometimes take new home owners by surprise.
Homestead Exemptions
In certain states, you may be able to apply for a homestead exemption, a program designed to shield homeowners from major property tax increases.
Depending on which state you live in, the exemption credits may differ.
Lien Releases
As noted above, your custom home builder will have hired many different sub-contractors to complete the job. Before you move in and accept ownership of your home, your custom homebuilder should have already paid them for completed work. Should a sub-contractor have an issue with payment from her general contractor (your custom home builder) they may have the ability to put a lien on your new home. While there are many opportunities to ensure lien releases are secured prior to settlement and move in, it’s important to ensure your custom home builder has provided you with a document that verifies your safety in this regard.
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