Craftsman Custom Home Builders, serving the Roanoke, Lynchburg & Smith Mountain Lake areas

  • Lynchburg:
    22174 Timberlake Rd
    Lynchburg, VA

  • Roanoke & SML:
    66 Builder's Pride Dr
    Hardy, VA

cort, Author at Craftsman Home Builders

As we enter the 2022 spring homebuilding season, we enter with significant uncertainty.  While new construction both locally and nationally has reached its highest level since 2006, challenges remain. If you’re looking to start building your home this year, there are several important factors that you should consider in that decision.

Financing and rates

As you may know, most people building a custom home do so with a construction loan that later converts to a mortgage when the home is finished. Before covid there was less building going on in general and both worker and material shortages were limited.  Completing a home in 6-8 months was typical. Today, the time from start to finish averages nationally 16 months. Our building time on average is 10-12 months.  For those looking to build it is critical to understand this, especially at a time when rates are rising. The mortgage rate lock that comes with a construction loan is usually good for just one year. Most banks do offer extensions, but typically charge a fee to do so. Every financial institution is different, so it’s very important to discuss this with your mortgage broker and understand clearly what the costs and process would be if it were necessary to extend your construction loan and maintain your rate lock.

Craftsman has worked with almost every bank in the region and has very strong relationships with many of them. At the start of this process, we can advise you on which banks would be more accommodating if this occurs, as well as what they typically charge.


To say that the housing market is in a wild state, would not be an exaggeration and there is significant uncertainty about what home values might be a year from now. If you’re pursuing financing, the bank is going to approve your building project, including the construction loan and the future mortgage, based in part on the appraised value today of similar homes recently built in your area. But, once your home is completed, the bank will sometimes conduct another appraisal on the finished home prior to issuing the mortgage.  If the prices of the existing homes in your area have dropped during your home’s construction, this can affect your home’s appraisal for the mortgage. It’s very important to speak with your mortgage broker about this scenario and understand clearly the implications of it, if it were to occur.

Materials shortages & a tight labor market

Shortages of building materials, delays with receiving them, as well as the price increases that go with them are still very much an issue. This includes items such as trusses, windows and doors, appliances, and even duct work. The supply chain is still a long way from being restored to what it was prior to the pandemic. It’s very important to discuss this with your builder and understand how they are addressing it, what effect it could have on your project after breaking ground, as well as what the builder’s policy is if the cost of a material rises considerably during construction, especially in the current unpredictable inflationary environment.

There is also a shortage of both qualified tradesmen and entry-level workers affecting nearly every facet of construction. This means that it is taking contractors longer complete projects, which is extending the build times for new homes.

At Craftsman, we work as hard as we possibly can to avoid delays. We have strong relationships with our suppliers and contractors and do all we can to get work completed on time and materials sourced and delivered to reduce any delays in construction

In conclusion

The purpose of this update is not to scare off anyone wishing to build a new home now. It is only to educate and prepare you for the potential challenges that exist. With proper planning these hurdles can be easily overcome and many today who are building their dream home, are doing just that. Choosing the right builder is a critical step, and more important now than ever to select a builder who is not just well-versed in the building part, but also in the business and financing parts. If you’re considering building, please reach out to us with any questions or for a free consultation.

Choosing the right building lot is one of the most important aspects of building a custom home and is something that can have a significant effect on your budget. This article will go over some of the key considerations for selecting a lot, some of the major risks and ways to mitigate them.

Consideration 1: The Lot’s Slope

An ideal lot has a gradual downward slope, from front to back. This level and direction of slope has several advantages. It allows for the easiest drainage of water away from the home, while also making it easy to incorporate a walk-out basement. Insufficient drainage can lead to water pooling, which can result in problems with a host of items including with the home’s footers and foundation, its basement, as well as walkways and landscaping.

Steep lots

Lots that are steep in slope create different issues than those that are flat. Steep lots, such as those frequently found around Smith Mountain Lake, can significantly increase foundation and excavation costs by requiring additional earth work and concrete. Depending on the steepness of the lot, there can also be additional cost for concrete pump trucks, as standard concrete trucks may not be able to get close enough to pour the footers directly. Steep lots frequently have narrow access to the site. This can sometimes limit the ability for multiple contractors to access the lot at same time, which can increase build time.

Flat lots

Flat lots typically carry higher excavation costs as they may require significant grading work to ensure water runs adequately away from the house. Additionally, if the walk-out basement is desired, a significant amount more of earth will need to be removed to make it possible.

Consideration 2: Well & Septic / Sewer & Water

The home’s waste disposal system and its water are critical aspects. If the lot is closer to a larger population area it may have access to public water and sewer. If it is out further, or simply in an area without public services, it will require a well and septic.

Well & Septic

Wells are less frequently an issue than septic systems, and it can be difficult to verify water availability prior to actually drilling the well. The more critical concern is the septic, and to be able to build a home on any lot, it must pass a percolation or perc test, which measures the water absorption rate of soil. If the soil does not perc, then you may have considerable difficulty building a house on the lot, if one can be built at all. We advise anyone considering the purchase of a lot to make their offer contingent on the soil passing a perc test for a standard gravity-fed septic system. This is important as a building lot may perc but for an engineered system. Standard septic systems currently cost around $8,000, whereas engineered systems can run upwards of $25,000 or more – a considerable increase in cost.

Water & Sewer

Building lots near cities or towns frequently have public access to water and sewer. In this scenario, the homeowner is responsible for running any water and sewer lines from their home to the nearest point of connection into the public systems. There are also hook-up fees charged, which vary greatly from one county and town to the next. Typically connecting into public water and sewer costs less than having to install a well and septic. Exceptions to this rule are when the distance to the nearest public line is considerable. In this case, as long as the lot percs for a septic system, installing a septic system may be a less costly option.

Whether it’s a well and septic or public water and sewer, the key thing is to understand as much as possible the associated costs for these items before purchasing any lot.

Consideration 3: Lot Restrictions & Restrictive Covenants

If you are considering purchasing a lot in any development or neighborhood with an association, it is absolutely critical to carefully review any lot restrictions or restrictive covenants that are in place. It is not uncommon for items to be required that limit the look and style of a house, or that require specific materials or features that may significantly increase cost or again change the look of the custom home you envision. We cannot stress enough the important of having a firm understanding of the association, its covenants and its approach to new construction. This can prevent a lot of problematic surprises down the road.

For people interested in building around Smith Mountain Lake, the maze of associations and their covenants can be a challenge to navigate. Having built many homes there, Craftsman can frequently offer first-hand knowledge that can be useful in evaluating a potential lake lot.

Protect yourself from headaches

Many builders, including Craftsman, are willing to inspect a lot that a customer may be seriously considering purchasing, and advise them on potential building challenges. In fact, it’s not uncommon for prospective buyers to even make their offers contingent upon their builder’s favorable review of the lot. Obviously, the builder can only give you their opinion based on their experience in the area and on what they can see above the surface, but their inspection can significantly lower your risk of issues.

October 11, 2021 – The truth is there is unlikely to be a better time than now, anytime soon. Even the most conservative economists agree that due to continued supply chain disruptions and high-demand for materials, the cost of building a new home is likely to continue to climb. The saving grace today is that mortgage rates for the time being remain historically low.

So what is driving this increase? Are builders really making out? On the surface the high prices may give the appearance that builders must be raking it in. As much as we wish it were true, we are feeling it as much as you the customer, and the pandemic has been an exceedingly challenging time for us. This year we have experienced unexpected double and triple-digit price increases on many of our materials including lumber, heat pumps, garage doors, ductwork, plumbing and electrical, as well as general material shortages.

With all of this crazy inflation and increased cost, why build now? As already mentioned, prices for building materials are likely to continue to rise, with many experts predicting them not returning to pre-pandemic levels prior to interest rates going up, and that is if prices ever return to what they were before. The Fed has already strongly indicated that rates will start to be ramped up early in 2022. The Mortgage Bankers Association (an industry group) recently predicted that 30-year mortgage rates could climb above 4% next year. If interest rates climb from 3.0% to 4.0%, your payment on a $300,000 home will increase by $167/mo.

In a moment like this, why choose Craftsman? In such an uncertain time, selecting a large, established, reputable builder such as us, can help you hedge much of the financial risk involved. Unlike smaller, more independent builders, we have the financial stability, volume and supplier relationships to weather unexpected price increases and material shortages, completing our homes as agreed, with minimal effects on our customers. And that helps those we build for rest a lot easier!

We also have the design and building experience to help our customers get into a new home as cost-effectively as possible, and can help you with the right choices to stretch your budget as far it can be stretched. We try as hard as we can to get everyone who walks through our doors into a new home within their budget. In today’s reality, it’s not always possible, but our promise to is that we’ll work harder than anyone else to try to make it happen.

Please don’t hesitate to reach out to us anytime with questions or to schedule a free consultation.

Did you know that there are actually three parts that make up the final cost of a custom home? This is something new to many customers when they start the journey, so we’re going to break it down for you here.

Many consider the cost of the home construction and the cost or value of their lot as factors, but there is actually one more key variable, and that is the cost in getting your lot ready to build on. This is also known for short as the “site prep“.

Site prep is figured separately from the price of the new home because those costs are highly variable and are almost 100% determined by characteristics of your specific lot, independent of the style home you choose to have constructed.

Site prep includes the following, among other items:

Basically site prep is everything required to be able to build the house on your lot, and these costs can vary from as little as $10,000-$15,000 to as much as $40,000, in total.  Additionally, it’s important to know that there are several different ways that builders charge for these costs.

If you’re building on a lot owned by the builder, these costs should be included  in the price of the home.  The builder most likely calculated them before he even purchased the property, knowing they’d be selling the lot as a package with everything included.

If you own or are purchasing your lot, as most of our customers are, there are three ways to account for the cost. 

Method 1 – Standard allowance

The most common method  is to give standard allowances for everything on the lot. This doesn’t require the builder to visit the site or obtain bids for all the work.  Of course, if your allowance is $15,000 and the cost turns out to be $30,000, you’re on the hook for the difference. 

Method 2 – Included in home price as a service

Another common way is for the builder to get the estimates, add his normal profit and overhead and include it in the final price of the home.  There’s certainly less risk for you that way, but now you’re paying several thousand dollars on top of the cost, if he includes his markup. There will also still be a clause that you have to pay the additional cost if say for example, they hit rock or have to go deeper for the well.  That’s fair since the builder can’t know those things for sure, but you’re still paying that additional profit of several thousand dollars for their management of this work.

Method 3 – Our Method

There are a few builders like us that will go out to lots you’re considering purchasing, and inspect and evaluate them with you. We’ll also obtain exact bids for all the work that will need done. If you choose to build your new home with us, we will include these items in the final contract price, at cost, without any markup, and you’ll see the same invoices that we do.

Of course, as unforeseen circumstances can occur with lot work, we do include a clause, as do all builders, that you’re responsible for any unforeseeable costs. But again you pay only cost for any work done, with zero markup by us, and of course we and the professional we work with evaluate the lot as thoroughly as we can to help lower the risk of surprises beneath the surface.  We feel our way is the fairest  for the customer.

Have questions on typical costs? Click here to get in touch.

We can provide you with an actual dollar for dollar detailed breakdown of what these typical site prep costs are and how much to they normally run. Just send us a note on our response page and we’ll send out a complete realistic breakdown.

Have a lot and are interested in a lot inspection? Just contact us via our contact page or give us ring at 434-266-1070 . There is no obligation, and we’ll out  take a look at your lot or one you’re considering buying, at no cost to you

It’s our most frequently asked question, and usually one we receive even before we sit down with a new customer: What is your price per square foot?

The hard fact is it’s not universal, and if one builder quotes you $100/SF and the next quotes $150/SF, you’re not one bit closer to determining which one is going to build you a better home or which one is a better value. There are dozens of factors that go into that price, and even the calculation method used to determine a home’s square footage varies among custom home builders. But the most basic difference, everything else being equal, is which style of home you choose to build. With the same specifications, the same amenities and the same finishes, certain styles of homes will always cost more than others.

The “hierarchy of home prices” is as follows, from highest to lowest and I’ll explain why.

  1. Single-story Ranch (most costly per square foot)
  2. Story and a half / Cape-style home
  3. Two-story home (most economical per square foot)

There is a simple explanation for the difference between a single story and two-story custom home. If you have a 2,000 square foot ranch home, you then have 2,000 square feet of roof and 2,000 square feet of basement. Whereas the same size two-story has half as much basement and half as much roof, so the two story will always be less per square foot of finished area. It’s important to remember that we’re talking finished square feet because in total area the ranch, if you finish the basement, potentially has 4,000 total square feet while the two story has a maximum of 3000 square feet (1,000 per floor).

Fifty years ago the Cape Cod was very economical per square foot because the builder just finished the attic area already built under the roof. But in today’s world the cape costs nearly the same as the ranch. The difference is that half of century ago labor was very inexpensive. Not so today. Because of that, most other style homes are built with a main roof structure that is engineered and constructed off site. These are the giant triangles, called roof trusses, that you can see on many modern homes if you take a peak under the roof. The framing crew simply has to set them up in place and then nail their sheathing on, usually in less than a day for a straight roof. The advantage of this, other than lower cost, is that the trusses are constructed in a controlled environment free of moisture and protected from the elements.

Capes on the other hand are usually built by hand with 2 x 12 rafters, on the site. Material cost for 2 x 12 rafters vs. 2 x 4 trusses is much higher, but the big difference is the labor cost to “stick frame” an entire roof. That additional labor and material brings the cost for capes right up there with ranches.

All of this is very important to consider in choosing your new home, especially if you’re a family that needs more square footage at a lower cost. Though for most customers, the decision on what style of new home to build won’t be determined simply by square foot cost. After all, you’re custom building a home because you have your own idea of what style you want and exactly what you want in it. And as you begin that journey, it’s important to keep in mind that price per square foot alone isn’t going to serve as a very good guide in comparing home building costs. It can still be useful, but you’ll need to dig a bit deeper to understand what that cost represents with any specific builder and consider how each style of home affects it.

In plain English, how does construction financing really work?

When clients come into our offices they have all kinds of ideas on how construction financing works.  Construction loans, permanent loans and single-closing construction-perm loans are all possible options. And while they all work the same during home construction, they vary greatly at the beginning and the end.

First, let’s see how they are the same.

With any type of construction loan, your payments during the building of your home are fairly small.  That is because they’re not based on how much you’ve borrowed, but just on how much the bank has paid out up to that point.  For example, let’s say you own your land and the cost of building your new home is $200,000.  When you close on your loan, you haven’t really borrowed any money, it’s just been made available.  Your builder is paid in instalments or “draws”, based on the amount of work that’s been done on your home at each stage.  For the first “draw”, usually banks will pay the builder 10% at the loan closing, or 15% when the foundation is finished.  Thus for your first payment 30 days later, you’ll be paying the interest on only a small percentage of the total loan – just on the amount that so far the bank has actually paid out to your builder.  

For instance, in the above example if your builder is given a draw of $20,000 at closing, then one month into construction you would have a payment of about $83, or 30 days interest on the $20,000.  Of course as construction goes on, and the money drawn out increases, likewise your payments also increase. This is why it is so crucial that construction remains on schedule – not just for your family, but for your finances as well.

Now, let’s take a look at how they’re different.

The biggest difference between the types of loans available is in the closing costs, legal fees and other costs associated with the bank process and the recording of your loan.  For example, if you have a construction loan and a permanent mortgage, which is typical, you’ll have two sets of closing costs.  Individually each set is not usually as high as those of a standard mortgage – so you won’t be paying double -, but the total of both together will be somewhat higher.  

A few Virginia banks have started offering single-closing construction-perm loans, which have been standard in other states for a number of years. With this type of loan, you only have one closing, at the beginning of construction.  When the home is complete, the loan simply “modifies’ into your permanent mortgage, thus saving you the second set of closing costs.  The closing costs will almost always be higher than for a construction loan, but rarely as much as the total of the two closing costs of the two-loan method discussed above. 

Depending on your individual circumstances one method or the other may be better for you.  

If you’d like more information on how each loan-type works, on the financing process in general, or some unbiased feedback on what specific area banks offer, please give us a call or contact us.

Often, by the time clients receive our brochure, they have already found a plan they’ve fallen in love with.  Whether it’s something they found online, something they’ve had drawn, or a plan they’ve created themselves, we can usually figure a cost to build the home on their property.  For a custom builder, pricing that home is a costly, time consuming process.  It’s very common for clients to tell us that they’ve gone to other builders, but never received any final pricing.  There can be a few reasons – the builder may be booked up for the year, the plan may be more complicated than they want to take on, but it’s usually just that it’s going to take them too much time to price.  Here are a few tips that will help you get better results when looking for custom home pricing.

Finally, if you’re understanding the complexity of what the builder has to do – estimating all the pieces and parts that go into a plan, estimating the cost of labor to put all those pieces together and estimating cost increases over 8 months – you’re going to have varying, sometimes widely, prices.  Because a builder happens to be the highest price on your home doesn’t mean he’s a “high priced builder”.  His estimating on your plans may have just come out higher (or everyone else is low) because none of them have built the plan before and none know the cost for sure.   So a word of warning, prices will always vary regardless of overhead or profit margins because everyone is estimating.  If you have two estimates at $275,000 and one at $225,000, STEER CLEAR! Of the fifteen to twenty homes we build each year at least three are for customers who had a contract with a builder and it never got started (after a long period of time and a lot of money paid to the bank) because the builder realized he couldn’t build it for the price he quoted.  Last year was out of the ordinary.  We had six, nearly a third of our customers, who came from another builder who didn’t deliver.  My best advice, which I give at all First-time Homebuyers Seminars that I do for builders in Virginia, is that price is undoubtedly important, but reputation is the only thing you can count on. Unfortunately, it’s impossible to compare apples with apples because there are a hundred places for a builder to reduce cost that you’ll never, ever know to ask about.  Ask for references from recent customers, check reviews, talk to local banks to see if they’ve had issues.  In short, do your homework to find out if the builder has a reputation for delivering on time and on budget.  You would do it before you buy a car, do it before you make the biggest investment of your life.

If you would like to talk with one of our highly experienced building consultants about finding the right lot and a free site inspection, building your new home or how financing works, please give us a call in Lynchburg at 434-266-1070 or Smith Mountain Lake at 540-912-0112.

With regard to land, our customers tend to fall into one of three categories: those that already own property, those that that have purchased property but are still paying on it and finally those that are planning to purchase property as part of their entire custom home package. The financing is structured the same way in all cases, but the initial steps differ slightly. In all land situations, you will need at a minimum a “Construction Agreement” with your builder, detailing pricing, specifications, terms and plans in order to apply for financing. A lender will not accept a mortgage application without this agreement as it’s a key component in determining the final value of the property and loan.

All construction financing is based on the total value of the house, site preparation (well, septic, excavation, etc.) and the land. The difference is simply in how much the value of the land counts as down payment (or as the bank looks at it, how it affects the LTV or loan to value).

Let’s just look at the three scenarios separately.

Scenario 1: Owning your land outright
In the cases of owning your land, or partially owning your land, you can often finance even your loan closing costs out of the equity in your property, allowing you to build with no money out of pocket. If you already own your property outright, the bank will still do exactly the same appraisal process. They’ll take your home plans out to your property and the appraiser will estimate the value of the entire property when the house has been built. In that scenario, if the appraiser feels the entire property will be worth $200,000 when completed, and you need $160,000 to build, then it is an 80% LTV. Your land is the same as cash to the bank so you have 20% down.

Scenario 2: Land purchased but not yet owned outright
In a similar scenario, the appraiser says the property will be worth $200,000 when it’s completed, but you still owe $10,000 on the land. In that case you’ll need to borrow the $160,000 to build plus the $10,000 to pay off the land, a total of $170,000, which would then be an 85% loan to value, or 15% down. Still a very good loan for you and the bank.

Scenario 3: Buying the property & the home at once
Buying the property and building the home in the same mortgage? The process is the same, but you would have to bring your normal down payment to the closing. The property is still appraised with the new home on it – let’s stick with the $200,000 figure. In that case the maximum you could borrow would be 97%, so you would need at least $6000 plus your loan closing costs.

Stay tuned for the next edition of “Craftsman Custom Tips”: What style home will really give me the most house for the money – and why?