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Homebuying
Question: We are shopping for a home, and have noticed some properties listed "as is". What does this mean, and is it a bad idea to buy one of these properties?Answer: Properties listed "as is" mean just that—you are buying the property with its current defects, no matter what they are.
As the buyer, you will definitely want an inspection performed so you know exactly what you are getting into. You can also structure your purchase agreement so that if the inspection reveals more problems than you want to address, you can get out of the deal. This very similar to the way HUD homes are sold. The only repairs HUD will even consider are major component problems, and it is not guaranteed that HUD will fix those.
As the buyer, you will definitely want an inspection performed so you know exactly what you are getting into. You can also structure your purchase agreement so that if the inspection reveals more problems than you want to address, you can get out of the deal. This is very similar to the way HUD homes are sold. The only repairs HUD will even consider are major component problems, and it is not guaranteed that HUD will fix those.
Melinda Wood
1st Choice Real Estate Group, LLC
Question: We are getting ready to close on our first home next month. What should we look for in the final walk-through of our home? Should we bring anyone with us?
Answer: For a previously occupied home, the final walk-through before closing is simply designed to make sure that the home is still in the same condition as it was when you signed the original purchase agreement.
As the buyer, you should have three main tasks. Make sure that the home is still standing. Look for obvious defects that may have occurred since the last time you saw it, such as a flooded basement, and check that personal property items included in the sale have been left in the home, such as refrigerators and ceiling fans.
There is no need to bring a home inspector to the final walk-through, since any inspection issues should have been already addressed within the time frames allowed by the purchase agreement. At this point, there will be no negotiation on repairs that were missed in the previous inspection. If repairs have been negotiated, the inspector should have rechecked them after the repairs were completed, not at the final walk-through. In a very few instances, a seller may damage a home while moving out, so check for any major problems of this nature. In Indianapolis, it is still somewhat customary for the seller to stay in the home until 30 days after closing, so obviously, the walk-through inspection would not be useful in this way.
For new construction, the walk-through inspection is important to settle any issues with the builder before closing the sale. Bring your REALTOR® with you for representation, and as a witness. If the builder agrees to make further adjustments to the home, try to get this in writing before the closing. My experience has been that the builder is more willing to do repairs before, rather than after, the closing of the sale. Even though the home is new, a buyer should always have a home inspection performed by an independent inspector before accepting it as satisfactory from the builder. Ask your REALTOR® about putting an inspection clause in the sales contract if the builder doesn't already have one.
Lori Choate
RE/MAX Connection
Question: My daughter is about to try to purchase her first house. She is 26, a college graduate and recently started her career. She is looking to purchase a small, older home in immaculate condition from an estate for $86,000. She is borrowing the down payment from her grandma against what will be her inheritance. Is there any additional help available to first time female homebuyers? We need unbiased advice so she can do this right. Thank you for any information you can provide.
Answer: There are a lot of programs available to assist first time homebuyers, and many are available to repeat homebuyers as well. Some loan programs allow you to finance 100 percent of the cost of the home, so if she uses the money she is getting from her grandma for closing costs and pre-paid fees, she may not need any additional funds to close.
There are numerous down payment assistance programs that may be used in conjunction with a Federal Housing Administration (FHA) loan. Several examples of these programs are Homebase, Ameridream, Nehemiah and the Genesis Foundation. All of them provide the buyer with the 3 percent down payment required on a FHA loan. There is a charge to the seller for these programs, so if they are used, your daughter must negotiate their use with the seller.
The Indiana Housing Finance Authority (IHFA) also provides funds for first time buyers who meet the income and housing cost requirements of their program. These income and house cost amounts differ by county, so make sure she checks with her REALTOR®, lender or IHFA before she makes an offer on a house. IHFA also offers below-market interest rates to qualified borrowers on conventional, as well as government-backed loans.
Another source of funds might be from your daughter's employer. Many companies offer housing assistance programs that will provide down payment or closing cost help for employees that are first time buyers. The good thing about most employee assistance programs is that if you work a certain number of years for the company, you do not have to pay back any of the money given to you.
If your daughter is a teacher, police officer or firefighter, she may be able to purchase select HUD-owned homes for half their listed price. As you can see, there are many sources of funds available to first time homebuyers—these are just a few of them.
Joel Epstein
Charter One
Question: My husband and I are buying our first home early next year. We have twins on the way, and plan to have a large family—so we need a large home. We were thrilled to learn that we were approved for more than we expected, but now my parents are urging us not to buy "that much house", even though we can get financing for it. We are both employed full time and have a manageable amount of debt from school loans and credit cards, so I don't understand their reasoning. What do you suggest?
Answer: What an exciting time in your life!
Many young families are caught in this dilemma. I understand that you want to make the best decision for your household, while not being disrespectful to the wisdom of your parents.
In reality, your parents may not have all of the current information. Get help from some people in the know, like REALTORS, mortgage brokers or tax advisors. Once educated, they will probably become your greatest supporter of your transition.
You could buy a larger home without it being a more expensive home. Some of the older homes are good values for the money, and builders have also re-engineered their products to maximize the square footage for their price.
Since the interest rates are reasonable, plus the tax advantages of deductible interest and property taxes are available, it would be a good exercise to show the comparison of your net effective payment of a "larger home", a "smaller home" and a rental property. Surprisingly, the larger home will most likely be the most favorable option on a monthly basis.
Many of your friends will be buying the smaller home first and will probably realize shortly that it does not meet the needs of their expanding families. Therefore, they will be buying and selling two homes during the time period you own one. Your parents will applaud you for your good management of resources without the costs of selling and buying in a few years.
No one says you have to borrow all that you can afford—consider your options without stretching to the absolute maximum qualifiable mortgage. For instance, you may not want or need two full time incomes in the future, so if you've kept your mortgage payment manageable, you may enjoy family options that you aren't considering right now.
If your parents are helping with the down payment, it is obvious they will want to have some influence. But when they are informed of all the options, they will probably acknowledge that you are on the right track.
Hope you enjoy your double stroller walks around your new neighborhood.
Brad Osborne
Century 21 Realty Group I
Question: We are building our first home, but honestly don't plan to stay there for more than five or six years. With that in mind, what upgrades should we go for to get the most resale value in the future? Do we upgrade the lot? Pick more square footage in the house? Add an extra bedroom or amenities like a fireplace or hardwood floors? We have limited resources, so we want to make the best choice for our money.
Answer: It is exciting to own your first home, and building new is the ultimate dream for many families. Your home, your colors, your way!
You are wise to begin your journey with the future resale potential in mind. Your limited resource dollars should be targeted towards the items that will add true value to the property, what we in the business often refer to as "the sticks and bricks". Avoid getting carried away trying to upgrade by adding designer features that won't add true value. Your real estate professional can be an invaluable asset in helping you evaluate the many available options. For interesting homework, ask your REALTOR® to share with you the findings on the most recent property improvement report. Annually, in a joint project effort, the National Association of REALTOR® and the National Builders Association analyze and compile a report on the local impact of remodeling dollars spent verses the actual value of the return on a resale basis. This report can give you some great insight.
As a rule of thumb, you'll want to try to buy as much square footage as you can afford. Bedroom and bathroom count is very important, but remember to consider how you will use each area. Many designs offer "flex-space" rooms that could have multiple uses. A formal living room could make a great home office, and a second bedroom could be a great craft room for the next buyer. A covered screened-in porch or extra garage could later be converted into additional living space.
Start with a floor plan that excites you. Make sure it meets your immediate needs for living space today, yet will allow you grow. It is much cheaper to add extra space or more room during the building process than to try to absorb the cost of a room addition later on.
Three-car garages are hot items right now—due in part to the fact that many communities have restrictions against mini-barns or storage sheds. Our society likes to collect things, proven by the plethora of mini-warehouse storage facilities around. As homeowners, a family can quickly accumulate many new home care maintenance items, such as lawn mowers, weed eaters, hedge trimmers and more. So count the closets and account for the amount of storage area under the roof. A garage space bump out, an unfinished over-the-garage bonus room or an unfinished basement can be relatively inexpensive options in the long run. Most communities have a limited supply of home sites that will accommodate a three-car garage, so you could be looking at the added cost of a lot premium, just by increasing your garage size.
Before you automatically assume that you will need to add fancy options and luxury upgrades, study the base price standards list provided by your new home salesperson. We have many great builders in our local market that already include as basic options—many of the items that you may think you'll need to upgrade. You might be pleasantly surprised.
Enjoy your building adventure!
Dee A. Young
NEW DAY, the real estate company
Question: Are there significant risks to buying a home "as is"? I see homes advertised "as is" all the time, but I don't know what that really means. Does it mean it needs to be cleaned out before move in, or that there are major structural damages? I have seen some listed at great prices, but I don't want to buy a lemon. What can I do to protect myself if I choose to buy an "as is" home?
Answer: A home "For Sale As Is" can be pretty scary if you don't know how to protect yourself. However, by exercising a little caution, you can buy an "as is" home relatively safely.
There can be a number of reasons why a house is offered for sale "as is." It might be bank owned due to a foreclosure, in an estate or the owner may just have no funds available to make repairs.
While a thorough home inspection by a qualified home inspector is always recommended in any home purchase, it is essential when considering a home being offered "as is." You really need to know as much as you can about the home's condition, so you will know what you may need to undertake after taking ownership. A qualified home inspector will be able to give you a good idea of the home's condition, including the roof and major mechanical systems, as well as plumbing and electrical issues. You should be present at the time of the inspection so that the inspector can show you the items of concern, if any.
If the property is unoccupied, ask your REALTOR® to make sure that the utilities are on at the time of the inspection.
Not every "as is" property is in need of major repair. Make a distinction between items that represent defects in the home and those items that are strictly cosmetic in nature. A defect is "a condition that would have a significant adverse affect on the value of the property that would significantly impair the health or safety of future occupants of the property, or that if not repaired, removed or replaced would significantly shorten or adversely affect the expected normal life of the premises." An item that is strictly cosmetic in nature is one that just looks bad, like stained carpet or torn wallpaper.
The real key, however, comes at the time that you make an offer on the home. To protect your interests, have your REALTOR® insert a clause such as the following in your contract: "Buyer understands that the home is being sold 'as is.' However, buyer reserves the right, following the home inspection, to withdraw from the contract if the inspection reveals conditions that the buyer is unwilling to accept, and buyer's earnest money shall promptly be refunded." This should give you adequate protection if the inspection shows that the entire heating and cooling system or the roof needs to be replaced.
Don't be afraid of a home that is offered "as is." They are sometimes offered at a bargain price, and you might find a real gem that just needs a little work with a mop, a broom and a paintbrush. Exercise a little caution, work with a good REALTOR®, and you'll be in your new home soon.
Dave Goff
Carpenter, REALTORS®
Question: We are selling our home, and have a signed purchase agreement with a buyer that hinges on a delayed closing in May. We plan to move out of state, and took a few days over the holidays to house hunt in our new town. We just wanted to get an idea of the neighborhoods, but unfortunately, we fell in love with a vacant home that has been on the market for over six months already. We can't afford two mortgages. Are there any options that would allow us to get the house in May when we move—like another delayed closing—or should we just wait it out and hope it doesn't sell?
Answer: Congratulations on finding a buyer! This is a most important step when you have a house to sell. Finding and buying a new home, while still tied to an existing home, is a dilemma faced annually by thousands of Hoosier families. It's hard to plan your own move when you don't know how long you'll be on the market. Without a confirmed legitimate buyer in hand, most sellers don't know how to accurately estimate their selling expenses and their net proceeds. Most families have the majority of their nest egg tied up in their current home, and most folks need to sell before they are able to buy, which makes it hard to plan the move forward.
Since you have already selected your next house, and you have your buyer, you now need to negotiate the new home purchase agreement. I would not recommend waiting to make your offer, as the house could sell out from under you. You also now know from first hand experience that sometimes sellers do consider offers with time-delay elements. The fact that the home has been on the market for a while can work in your favor.
The new purchase offer can be written with a closing in May, tied to a set number of days after the first closing. You can also request immediate possession, since you know the home is already vacant, and this should help you with your move from the first home. You'll want to include a provision that the closing of the new house is subject to the closing of the sale of your current home. This will help to protect you from the possibility of owning two homes simultaneously, in case something goes wrong with your buyer's financing.
Having both the selling and buying ends tied up in contracts will permit you to better control the entire process, including the timing of your move. Knowing where you're moving and what costs you have in your purchase makes it easier for you to determine what furnishings, appliances and equipment you'll take with you and what can be left behind, and will give you a good idea of your closing expenses.
Dee A. Young
NEW DAY, the real estate company
Question: I'm considering buying a "fixer-upper" that needs considerable work. The seller is unwilling to make the repairs. Should I buy anyway, or keep looking and maybe pay more for a home in better condition?
Answer: Your main concern should be that you are making a relatively good investment. Consult with your REALTOR® to assess the home's location and market value, estimate the cost of repairs, and compare with other area homes in good condition to see if you will be spending more on the cheaper home in the long run.
In some cases, the less-expensive house is not necessarily the best buy. Some homes that might be called "fixer uppers" really should be used for fire department practice. If the home is in a good location and has a good foundation and roof structure, it could be a good home to fix up.
Before making any decision, there are a few things to consider. You should determine whether you can do some of the repairs yourself, or if you need to have all the improvements done professionally. Another big factor is financing. You generally need a larger down payment to buy a home that is in need of significant repairs. Your REALTOR® will help you to get pre-qualified so you will know if you can even purchase under the conditions. There are some loans that deal specifically with rehab houses—those will help finance the needed repairs. Consider how long the house has been listed. If the home has been on the market a long time, it could be priced too high. Have your REALTOR® do a market analysis to determine the price at which it should be listed. If the home only needs redecorating or a new roof, you can generally work out an offer that is a bit higher than the list price allowing the seller to pay for all the repairs, as long as it will appraise at the appropriate price. It is easy to make an emotional decision the when buying a home—your REALTOR® is the best person to help you wade through the many decisions.
Anne Elsbury
Century 21 Realty Group Elsbury
Question: Are there vacation properties available in central Indiana? I'd like to purchase a getaway home, but don't want to travel long distances every weekend to enjoy it.
Answer: Popular locations for second home purchases can be found in central Indiana. Many vacationers choose communities in Brown County for their getaways. The towns of Nineveh and Nashville, Indiana, are both about 40 miles south of Indianapolis on State Road 135. Both are widely known areas—even nationally. When we first moved to Indiana from North Carolina, my mother—a librarian—had already heard of quaint Nashville. The locale was made famous as an artist colony for almost 100 years. T.C. Steele in particular loved to paint Brown County, and it is still home to many artisans and craftspeople. The region is also known for great Hoosier home cooking, especially for the famous fried biscuits with apple butter.
The greatest attraction is the beautiful scenery; this includes rolling hills with spectacular views, the largest state park in Indiana, and an area with one of the lowest populations, allowing vacationers to truly get away from the maddening crowd. Local recreation is abundant, and includes camping, hiking, horseback riding, hunting, and fishing.
Another popular getaway spot includes the areas of Cordry and Sweetwater. The Cordry /Sweetwater area has no real "town," like Nashville, but for some, that is the attraction! The first time I drove around the lake area in the fall, I was agog. The homes are charming and the heavily wooded lake setting is incredible!
The prices for these getaway homes can range from $75,000 to $500,000 for a mansion on the lake or a charming log cabin away from the water. One area development boasts custom-built log homes complete with Jacuzzis, multi-tiered decks, sunrooms, and terraced landscaping. Many of the properties have great water frontage and can often be purchased furnished and stocked with amenities—like pontoons!
Jeanne Tomlin
Tomlin, REALTOR®
Question: "I am a single mother of two looking to buy my first home, and I feel very unprepared every time I attend a showing. I know if I like the way a home looks or not, but I have no idea what practical issues to consider. Is there a list of things I should check, or questions I should ask the real estate agent?"
Answer: Buying your first home can be exciting, but it can be a little scary, too! Before you start house hunting, figure out what you want out of a house. Make a list of realistic needs and a list of things that would be nice, but are not necessary. Additional expenses—such as appliances or window coverings—may not be in your budget the first year in your new home. Defining those "wants and needs" can be important when making a decision on which house to buy.
When you look at a house, it is important to look beyond the current homeowner's furnishings. Look at the "bones" of the house, the area it is in, and consider if it is priced well. You should ask the seller to provide a one-year home warranty to cover major expenses. Also, ask questions regarding resale in the neighborhood. Look at the property several times if you need to. If you are not comfortable with repairs or maintenance, you might ask your agent to take you to a new homebuilder. Don't be afraid to ask questions, and don't be afraid to say no if you really don't like something. After all, you and your family are going to make whatever house you choose your home.
Vicki Kenworthy Wright
Carpenter, REALTORS®
Question: What is an "as is" sale?
Answer: This term is often used in the local market to describe a property that is being marketed in its current condition. That is, it is not subject to any further negotiation for condition. The seller is offering no warranties regarding the property's condition, and in turn, the buyer is releasing all parties from any and all liability relating to any non-latent or disclosed latent defects or deficiency affecting the property.
David B. Cain, MAI, CCIM
West Clay Realty
Question: I am interested in building a new home. Should I use a REALTOR® to help me find vacant land?
Answer: Yes—there are so many conditions associated with building on vacant land, a REALTOR® is essential to the process. First, zoning must be determined or applied for. The land should be protected in any offers, with closing subject to zoning, the ability to use the land for its intended use, builder approval, available drainage, and many other protections the land owner may not have even considered.
Anne Elsbury
Century 21 Realty Group Elsbury
Question: I am currently renting an apartment, but would like to enter the market for a home. I want to hire a REALTOR®, but don't know what kind of questions to ask or what kind of information to request. Can you help?
Answer: This is a common situation. When trying to find a REALTOR®, the first thing most people do is ask friends and co-workers who have recently bought a home and seem happy about the experience. Choose two or three REALTOR®, and make the initial contact. Some clients choose to call and talk with the agents, e-mail, or meet them in person—whichever option best suits their comfort level.
Find someone who knows the market you hope to buy in. Choosing a professional who knows how to work with first-time buyers is also important—someone who can push or hold a hand if necessary, that has a 'take-charge' personality or 'gentle-nudge' style—again, whichever approach best meets your needs.
A REALTOR® needs to have broad financing knowledge, especially when working with first-time buyers with no credit, poor credit, no or little down payment, and a wide range of other contingencies. They will need to explain the process of buying a home or condo, and stay in close touch with the buyer. The home-buying process can be lengthy. REALTOR® often work with their clients for up to a year or more. The REALTOR® will need to guide you through the process of being pre-approved, selecting a property, getting family members or friends involved in the decision-making process, and perhaps even dealing with buyer's remorse as a result of the huge commitment of a home purchase. The REALTOR® will also usually help with inspections, closing, and post-closing maintenance needs.
But remember: patience and a warm smile are two of the best tools for any REALTOR® working with a first-time buyer!
Kaye Hirt Eggleston
Carpenter, REALTORS®
Question: What special options or services are available to first-time homebuyers?
Answer: Many options and programs are available for first-time homebuyers, depending upon the need for assistance. Indiana Housing Finance Authority (IHFA) offers First Home and First Home Plus programs. Both enable a buyer to receive down-payment assistance, depending on the number of people residing in the home and the income. The traditional Mortgage Revenue Bond program also has income and maximum cost acquisition guidelines that are available through IHFA. To be eligible, you don't have to be a first-time homebuyer—but you cannot have owned a home in the past three years. The program is open to any homebuyer that meets the other income and acquisition guidelines.
IHFA can provide you with a list of lender participants—they can be reached at 317-232-7777, or through their Web site, www.indianahousing.org or by phone at (800) 872-0371.
Many other programs are available, such as the Down-payment Assistance Programs (DAP) offered through many nonprofit organizations. In addition to national lenders, many local lenders participate in DAPs as well. Available programs include Nehemiah, Hart, AmeriDream, The Buyer's Fund, Homebuyer Gold, Affordable Housing Concepts, Own Program, and the Genesis Program, to name only a few. They can all be accessed through their respective Web sites.
Connie Dixon
National City Mortgage
Question: We are considering the purchase of a new home, and learning as much as we can to get ready. When my sister and brother-in-law bought their home recently, they had an attorney involved, and said they have for their previous two home transactions. Many other friends and coworkers we have talked to about this haven't brought an attorney to the table. How do we know if having a lawyer is necessary? Are there any benefits to doing this?
Answer: Whether or not you have an attorney involved probably depends on who is drafting your purchase agreement on the new home. If you are working with a REALTOR®, they will have all the forms needed to cover the purchase of your home. Your personal comfort level with the documents will probably help guide you on deciding the level of involvement you need from an attorney.
I sometimes have clients who like to have their attorney review the purchase documents prior to their presentation to the seller. The title work, survey, deed, and vendor's affidavit can all be reviewed by your attorney prior to closing, if you so desire. Most documents signed at closing are standard mortgage forms with your personal information and the particular property information for the purchase inserted.
When you sit down with your REALTOR® to discuss the homebuying process, it is probably a good idea to go over the forms you will be using for the purchase and mortgage process to better understand the verbiage. Then, you can determine your comfort level and your individual needs.
Kathy Hall
Century 21 Realty Group I—The Elsbury Team
Question: We moved to Indy this winter from Iowa. We still don't know many people in town or too much about the area, but we know we want to buy a home on the south side of town to be near work. My uncle is a REALTOR® in Boston—could he help us buy a home here instead of using someone local that we don't know?
Answer: Your uncle can help by referring you to a local REALTOR® and being involved with advice and opinions, but you will be best served if you are represented by a local REALTOR®. Local REALTOR® have more knowledge of the area and state-specific real estate laws. The contact should be from REALTOR® to REALTOR® initially, usually from the Council of Residential Specialists membership lists, franchise referral directory, National Association of REALTOR®, or other REALTOR® organizations. But you definitely need to use a local REALTOR®__and an experienced one. You will be much more satisfied by this scenario than by having your uncle try to work in an unfamiliar area where he is not licensed and, therefore, is unable to legally represent you. You should, however, consider looking at the homes with your uncle. Having a REALTOR® in the family is a valuable resource, and the Internet can make working together across the miles easy. He can help you and the local agent, but you will need to have a local professional representing you in the purchase.
Anne Elsbury
Century 21 Realty Group Elsbury
Question: We purchased our first home this year, and are wondering if any of the closing costs or other expenses is tax deductible?
Answer: Congratulations on the purchase of your new home! Homeownership in Indiana (and the United States) is at an all-time high and you are to be commended for taking that important step.
Some of the expenses you incur in the purchase of a home are tax deductible—even if your purchase is not your first home. Your question reminds taxpayers that there are different kinds of expenses that are tax deductible. Certain closing costs can be deducted, as can many expenses associated with homeownership. However, you must file Form 1040 and itemize your deductions on Schedule A (Form 1040) to get the tax benefit. Only two closing costs are fully deductible: real estate taxes actually paid to the taxing authority and interest that qualifies as home mortgage interest. Both of these costs are typically included in your monthly house payment and deposited to an escrow account. Your real estate taxes are paid to the county treasurer by your lender if escrowed. To be deductible, home mortgage interest must be on a loan secured by your main home (or a second home); the loan can be a first or second mortgage, a home improvement loan, or a home equity loan. Each year, your lender will provide a Form 1098, or mortgage interest statement, which shows the payment of taxes and mortgage interest as well as reduction of principal, homeowners insurance and any other expenses paid from your escrow account during the previous calendar year.
According to Eugene P. Fitzgerald, CPA and president of Fitzgerald & Isaac, a good place to start looking for the answer to your question is the Internal Revenue Service itself. IRS Publication 530, "Tax Information for First-Time Homeowners," is available online as a printable PDF file (http://www.irs.gov/pub/irs-pdf/p530.pdf). Since persons licensed by the Indiana Real Estate Commission are prohibited from giving tax advice, homeowners should consult a tax advisor as they prepare their tax returns. Contact Gene Fitzgerald or Stan Isaac at Fitzgerald & Isaac, 317-844-8300, for detailed tax information and planning ideas.
Sometimes the cost of obtaining a loan includes fees called points, such as loan origination fees, loan discount points, etc. These fees are deductible on a pro rata basis over the term of the mortgage, but may be fully deductible if you meet certain conditions outlined in IRS Publication 530.
Other settlement fees and closing costs including title insurance, legal fees, recording fees, and surveys you paid for while buying your home are not deductions, but can be added to the basis or overall investment you have made; your home's basis may generate tax benefits when you sell your home.
Roger Howard
1st Home Realty
Question: I am purchasing my first home—a condo—and have been told I have to have project approval. What is this and who handles it?
Answer: Insurers of loans, such as the Federal Housing Administration (FHA), approve condominium projects to protect against insuring loans on projects with negative marketability issues. The project approval includes identification of features, such as the homeowner's association, density of units, construction quality, amount of owner-occupied units (usually must be at least 51 percent) and the legality of documents pertaining to project formation. The FHA offers a list of all currently approved projects and sets out requirements on how to get approval.
The approval process is best left to a qualified mortgage lender. Generally, the necessary documentation is submitted to the Department of Housing and Urban Development (HUD) by a mortgage lender. HUD strongly recommends that individuals, such as buyers and builders, use the services of a lender to make project approval submissions. Be aware, though—if the project is not currently approved, the approval process can take up to six weeks.
David B. Cain, MAI, CCIM
West Clay Realty
Question: When buying a home in an area relatively undeveloped (rural location), is it wise to investigate the zoning and potential development history/future of the area? How can I find out what the parcel across the street from my new home is zoned for? Planned development? Who can I call to get answers to these questions?
Answer: It is wise to thoroughly investigate a property when considering making a purchase. In addition to the typical home inspections many consumers now consider common procedure, you should check out the nearby neighborhoods and all the land around the general vicinity. Your investigation should include the entire area, regardless of whether you are looking in a rural or an urban setting. Knowledge can help you avoid being surprised later. I've dealt with many situations with homeowners who didn't check out what was future—planned in "their new backyard", only to be disappointed to discover that their farmland-view changed into a new housing addition seemingly overnight. A little homework might have made all the difference.
If there is any open land near your new dream home, be aware of the possibility that something may already be in the planning stage. Development takes time—it is not a quick process and there are usually many people involved. Projects are envisioned, land is earmarked for purchase, buildings are designed, preliminary plans are drawn, and everything is presented to the local officials for review. If the land isn't already properly zoned for the intended new use, all the nearby property owners must be informed, public hearings must be held and opportunities must be given for affected neighbors to comment, before zoning can be changed.
Often overlooked is the possibility for changed uses of the properties with buildings already in place. For instance, land previously used as a school might be zoned to allow it to change into an office building, or a church congregation relocating might sell the grounds to a developer of apartment buildings. If there are any vacant buildings nearby, you will need to know what options exist. Many areas are sprinkled with properties that have been approved for use exceptions, known as zoning variances. Doctor or dentist offices in a converted house, or a home-based day care center are typical examples found in residential areas. It is not unusual to find home office operations, such as small contracting firms, realty offices, dog kennels and such, on the larger lot parcels on the outskirts of town.
For the answers you need, start with your REALTOR. Most zoning information can be found in your county offices, but knowing who and what department to contact can be daunting. It is helpful to have someone familiar with the systems on your side. Some towns are fortunate to have local citizen groups actively involved in monitoring zoning issues. For example, the Land Use and Zoning Committee of the Franklin Township Civic League in Marion County is an all-volunteer group that offers information, assistance and guidance to the local neighbors dealing with zoning issues. Meeting monthly, they allow developers to bring their projects and plans to present and discuss with the local citizens. This kind of active participation can be very beneficial to new residents moving into rapidly developing markets.
Dee A. Young
NEW DAY, the real estate company
Question: "I am building a home—should I still be using a REALTOR®? If so, what type of things can they help me with?"
Answer: Absolutely! A REALTOR® can be of great assistance in the home-building process. When building a new home, there are so many choices, having a professional on your side can make the process more comfortable and enjoyable.
A REALTOR® can advise you on the market value of the decisions you make in the building process, as well as use past experience to help you plan your future home. Examples could include the resale value of a basement, or a finished basement, the value of a second fireplace, or a three-car garage. REALTOR® know what buyers are looking for and can help make value-based decisions when building.
Indianapolis has some of the best builders in the United States, and they all appreciate the assistance and experience a REALTOR® can provide. Builders are always concerned with having satisfied customers—a REALTOR® will assist in accomplishing that goal. Building a home is a big investment, don't do it alone. A REALTOR® will make the experience more enjoyable.
John T. Creamer
Century 21 At the Crossing
