Why Louisville custom home building is different
Louisville is unusual because you can build a custom home in 5 different counties (Jefferson, Bullitt, Oldham, Shelby, Spencer) plus across the river in Clark, Floyd, Harrison IN. Each jurisdiction has different rules, different soil, different utility access, and different builder talent pools. The best builder for a Norton Commons infill lot is rarely the best builder for a 10-acre Scottsburg tract.
The 5 questions that reveal everything
1. How many custom homes did you complete in the last 24 months? (Less than 4 = not really a custom home specialist.) 2. Can I drive by 3 of your last 6 builds without an appointment? 3. What is your fixed-price vs. cost-plus contract structure, and what markup do you charge on cost-plus? 4. Who pulls the permits and handles the inspections? 5. What does your standard warranty cover and for how long?
Contract clause #1: Fixed-price with a stated contingency
Your contract should specify: (a) a fixed total price, (b) what is included and what is NOT included, (c) a written allowance for every selection (cabinets, flooring, lighting, plumbing fixtures) with the brand and tier, (d) a stated contingency of 5-10% that you control. If the builder will not give you a fixed price, ask why. If the answer is "every custom home is different", they are telling you they do not know how to estimate, walk away.
Contract clause #2: Milestone draw schedule
Standard custom home draw schedule: 10% at signing, 15% at permit + start, 20% at foundation complete, 20% at framing + roof dried in, 20% at mechanicals rough-in, 10% at drywall, 5% at substantial completion. The final 5% is held as retention until punch list is complete (30-60 days after move-in). Never pay more than 80% before the home is dried-in.
Contract clause #3: Change order process
Every change must be in writing, signed by both parties, with a stated cost and a stated schedule impact. Verbal changes do not exist. Change order markup should be capped (10-15% is standard, anything over 20% is excessive).
Contract clause #4: Substantial completion vs. final completion
Substantial completion means the home is ready for you to move in. Final completion means the punch list is done. These should be two separate events. Final payment (minus the 5% retention) is due at substantial completion. The 5% retention is due at final completion, after punch list is closed.
Contract clause #5: Warranty and what it covers
Standard 1-year warranty on workmanship. Manufacturer warranties on appliances, HVAC, roof, etc. vary. Your contract should specify: (a) what the builder fixes (defects in their work), (b) what the manufacturer fixes (defects in products), (c) the response time for warranty claims, (d) what happens if the builder does not respond.
How we structure our custom home contracts
Fixed-price. Milestone draws. 5% retention. 1-year workmanship warranty. 30-day punch list resolution. We pull all permits. We use the same 5 subcontractors we have used for 5+ years. We will show you 5 of our last 10 builds before you sign.