That seems very taxing on the company. I'd rather screen the candidate before committing to anything via interview/coding challenge, etc... The take-home coding challenge seems like a good idea -- less pressure than coding during the interview and allows the interviewer to assess the "real life" performance.
> Ask them to build something – anything!
That's great, but a big part of working at a company is building something that you don't like or don't understand well -- talking to stakeholders, customers, figuring out specs, etc -- something that a good take-home exercise can assess