Home Buying in Indianapolis>Question Details

Blaze, Home Buyer in Las Vegas, NV

Possibly relocating to Indy from Vegas. Any great deals going on for New Homes in the Indy suburbs now?

Asked by Blaze, Las Vegas, NV Tue May 6, 2008

Hi. I am strongly considering moving to Indianapolis from Las Vegas due to the better prices per SQ FT. I have all my relatives in Chicago anyway, therefore it's a better solution for my immediate family as well.

Anyway, I have a few questions... are there any great deals on New Home properties in the Indianapolis suburbs? How is the market holding up? Is it still bad? In Vegas, we have so many foreclosures that while the market is a Buyers Market, there are so many people bidding on the REO homes in my price range, that it's far too frustrating to consider Vegas as a viable option anymore. The price bracket for sq footage is going back up in many cases, so it's not as Buyer Friendly as it was about 4 mos ago.

Deals I am looking for are no money down options, devs will pay all closing costs, etc. We had tons of these in Vegas a while ago, but very few now. Just home upgrades now, which is nice, but I hope to find better deals in Indy. Are many of them they out there?

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Browsing a few of the many blogs and home info sites this past week, I noticed Davis homes being discussed in them. Some commentary indicated that there are current owners of closed Davis homes that have had mechanics liens placed on them for unpaid materials. This was after they received the vendor’s affidavit at closing stating everything was paid. Not a good situation to be in. I would be wary. Now if you can get a fire sale price and do your own work making sure vendors were paid, and securing your own lien waivers, that might give you a more secure position in the sale. At this point, I would not trust the builder in this matter. Withstanding that, my personal experience as a broker in their transactions and my clients experience with them after the sale were less than satisfactory. Davis is a sinking ship as of now and my client has not had good callback response to handle issues after the close. If they close doors altogether, forget about any warranty work. When it comes to financing, I have always been skeptical of builder financing and incidentally, had the same discussion with the pres. of Davis finance. Builder offers discounts on home, buyer signs deal, builder then makes financing through "THEIR" finance company a requirement. Buyer finds better financing 2 weeks later. Builder says tough luck, you will pay inflated financing or loose your deposit if you back out of deal or price of home goes up. Rate on builder loan is 1 1/8th point higher than average of 3 local banks. Closing cost are much higher and the YSP the builder’s finance company receives is over 6 points! Talk about getting screwed. Well I was able to negotiate everything away to normal average costs except the rate was still 1/8 of a point higher. My client did not want to fight for the remainder. Davis finance guys response to 6+ point YSP was they "they have a right to make a profit". (ysp, yield spread premium - is what loan company makes on originating the loan.) Hell, they probably made as much on the loan as the house! Remember that most builders want to close at "their" title company. That might explain why owners received the deed and vendors affidavit at close, but still had mechanics liens filed after the fact. I could go on more about other pitfalls to watch for and how and when to fight them but here goes an attempt on answering some more of your question. 100% financing/no money down is thin to none here, but available with steller credit. I think this has more to do with the shake up of the mortgage market and unavailability of those products than anything else, much like you are seeing in Vegas. Builder paid closing costs. Sure they will do that, but watch it's not built into the price of the home. Example: You pay $105k for a $100k home but all costs are paid on your behalf......Not really a deal here, it's just built into the price and you don't see it out of your pocket. There are lots of foreclosures, REO's and corporate owned homes in the Indy market but I have yet to see mass sell off's at 20-50% discounts or more that I have heard about in markets like Vegas. There might be individual deals that happen like this but generally speaking, I'm not seeing them. Now where I think you are finding deals are in 1-3 year old homes that have already been foreclosed. They were typically sold new with ARM or buy down financing. When rates ratcheted up after 2-3 years the owners could not afford them, on top of the home being assessed after it was built and now paying property taxes on the home instead of just land. Corporate homes seem to just want to get them off the books. The last 4 homes I have negotiated on have fit these selling patterns. Different sides of the city have different demographics. "Indy" is a pretty broad term. As investments, I think you might be better off in some of the surrounding counties where there is population and job growth, better schools, etc. This helps gain an advantage when you go to sell. Presuming a good market now, it will probably be a good market down the road when you want to sell. Thanks, hope this helps. - Eric Karrfalt, "helping my customers gain a competitive advantage since 1992. "
0 votes Thank Flag Link Wed May 7, 2008
Hi Terri...

Yes, I understand that. I watch a lot of HGTV. :-) But still, my question pertains to Davis Homes. You had mentioned that they were in Big Time trouble, with foreclosure proceedings filed against them. Since this is the case, would the bargaining power be in my favor towards approaching them? Or would it not really make a difference at all? Or would it be a bad idea because if the banks foreclose on them, then my home would be in some form of jeopardy?

I really like Davis Homes and their designs -- but I am unsure of approaching them. Any advice on the matter?
0 votes Thank Flag Link Wed May 7, 2008
Hi Blaze,
As with any new home purchase you always need to be informed of the neighborhood values.
You want to make sure you are not purchasing in the top of the neighborhood. Ideally you would want
your home to be one of the lower valued homes in the neighborhood. This way your homes value would be increased just by being surrounded by homes of greater value. This is called progression. This theory is true in new construction no matter when you purchase. And in todays marketplace it is now more important than ever with the lack of appreciation.
0 votes Thank Flag Link Wed May 7, 2008
I am a Realtor in Greenwood a southern suburb of Indianapolis and I specialize in the Indianapolis market. I can tell you we are on an upswing and our market is going to see existing home prices go up in the next 18months or so. Yes it is still a buyers market but things are set to turh around. I would be happy to be of assistance in your quest for a new home here in Indy.

Please give me a call,

Brad Osborne
Coldwell Banker
317-883-3333
0 votes Thank Flag Link Wed May 7, 2008
Hi Terri...

Thanks for your response. Do you think purchasing a Davis Home now is a smart move then? Or would it be bad? One would think if they're in financial trouble, then might just try and liquidate everything they have to avoid it, yes?
0 votes Thank Flag Link Tue May 6, 2008
Well lucky for you your move to the Indianapolis area will not be as big of a gamble as your move to Las Vegas. The Indianapolis area as a whole has seen activity pick up in the last 30 days. For the past 2 years Indiana and Ohio were always jocking back and forth for the #1 position of foreclosure. This year Indiana has dropped to #10. Normally dropping from #1 to #10 is not a positive thing, but for this statistic, it is a welcome change. Builders on the other hand still have lots of new home inventory on the market that remain unsold. For the builders this downturn has been devastating. Sundays paper reported that Davis Homes (one of Indiana's longstanding production builders) is having foreclosure proceedings filed against them. This is just one of the many Indy Builders that are in financial trouble. Now for the positive effect of all this. If you are a buyer wanting to buyer a new home, you can pick up numerous builders inventory homes for cost or below cost. Many of the big production builders also have their own financing available so they are able to offer below market rates, assistance with closing costs etc. so long as you use their finance/mortgage company. So not to worry it is still a buyers market when it comes to new construction in Indy.
0 votes Thank Flag Link Tue May 6, 2008
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