Don’t Buy the House… Buy the Neighborhood!

March 7th, 2017

Finding the right neighborhood can be just as important as the right house

a-viable-neighborhood-is-a-community-and-a-viable-community-is-made-up-of-neighbors-who-cherish-and-quote-1

When you’re looking to buy a new home, you need to keep in mind the location of that home and the neighborhood surrounding it. In many cases, it’s the neighborhood that will make you feel welcome and content, not necessarily the floor plan and square footage.

Come up with a list of what you’re wanting out of a neighborhood. (Feel free to use to the following questions as a guide.) Then, refer back to your responses when you are considering what neighborhood will fit your lifestyle (and life-stage) best:

  1. Commute

    • How long will it take you to get to work? School? Church?
    • Are you willing to spend a bit more on gasoline for the “right” neighborhood?
    • Could you occasionally ride your bike from here? How about walk?
    • Is public transportation an option?
  2. Amenities

    Carefree Pool & Clubhouse 2016

    Carefree Club pool and club house.

    • Are there neighborhood perks? Pool? Tennis? Playground? Walking paths?
    • Are there parks nearby? How close?
    • How far is the nearest grocery store? Or your favorite boutique?
    • Does the neighborhood do any of your property/home’s maintenance? (Home exterior, landscaping, lawn mowing, etc.)
    • Is this an age-restricted community? Are there additional benefits to this?
  3. Entertainment

    • What restaurants do you frequent? Are they close?
    • Are there movie theaters? Live theater? Symphony?
    • Local breweries, wineries, and distilleries are popping up all over. If that is an interest, is there one nearby?
    • Is there a city pool, community center, water-park, or skating rink nearby?
    • Are there bantam sports offered in the area?
  4. Appearance

    • Is the neighborhood clean? Yards, streets, common areas?
    • Is it scenic and “visually appealing”?
    • Are there sidewalks and streetlights? How do they look?
    • Is the entrance well-maintained?
    • How many homes are rented? (Renters often do not care for a home with the same enthusiasm/effort as a home-owner.)
    • Don't buy the house; buy the neighborhood. Russian ProverbAre the yards large or small or mixed?
    • Does the neighborhood have nice trees and foliage?
  5. Involvement

    • Is there a Homeowners’ Association? How strict is it?
    • Does the neighborhood have a social media presence? (Facebook, NextDoor, Twitter, etc.)
    • Are there neighborhood groups that meet? (Card parties, parent groups, religious studies, etc.)
    • Does the neighborhood host events? Halloween, 4th of July, National Night Out, Yard & Holiday lighting contests, etc.

 

SHOW ME THE MONEY!

February 23rd, 2017

Considering selling your home?  It’s critical to know what your home will sell for, but it’s even more important to know how much money you will walk away with – or as Jerry Maguire would say “Show me the money”!

Will there be enough for… a down payment on a new place, or to retire, or to send the kids to college or to …..?  So how do you figure this out? The internet is flooded with Home Valuation sites, but these are rough estimates at best, and never share the real costs of selling.  Let us clear this up for you!

A lovely family recently contacted us about selling their Indianapolis home.  They were first time sellers and had many questions about how the process works.  We chatted about this for a little while and then began discussing the value of their home and how much money they could actually expect to receive at the closing table.  As always, we had prepared a custom Estimated Net Proceeds document (see below) with 3 different sales price scenarios based on recent sales in their neighborhood.  They were so relieved to see all of the costs spelled out!  They were expecting brokerage fees and realized there were other expenses too….but had no idea what they really were or how much they would be.    They called these mystery expenses “the scary stuff in the middle” —  between the sales price and their profit!

Sample listing meeting net sheet

So what is all that “scary stuff” in the middle?  Here are the most common:

  1. Brokerage Fees make up lines 2 and 3. These can vary, but usually average around 6% of the sale price and are split between the listing and selling broker.
  2. Seller Assistance with Buyer Closing Costs. If the offer requests the seller to contribute a certain amount (anywhere between $1000 – $4000) towards their closing costs, this would be reflected here.
  3. Pro-Rated Property Taxes. In Indiana, property taxes are paid one year in arrears (behind).  In this example the closing date is March 31, so taxes are still owed for all of 2015 and from January 1 to March 31 2016.  Because the state has not yet billed these taxes, the seller provides the buyer a credit for the taxes still due and then the new owner assumes all tax payments from the date of closing.  If the sellers are also buying a new home in Indiana, they will receive a similar tax proration from the sellers of that property, so this may be a wash if you’re remaining in Indiana.
  4. Title Company Fees. It’s customary for a seller to provide an owner’s title policy for the buyer.  This insures the buyer against any unknown liens or title issues on the property.  The actual owner’s premium is based on the sales price so it may change with each counter offer, however the other title fees normally remain constant.
  5. Other Expenses include miscellaneous fees such as State Insurance fees, county recording fees and possibly a Home Warranty (which can range in price from $390 – $600).

The fees are subtracted from the sale price to determine the subtotal.  Then the Mortgage Balance is also subtracted to determine the Estimated Net Proceeds – the amount the seller will walk away with after the sale.

When our sellers receive an offer they see this document again, but this time it’s updated with the actual numbers from the Offer and any Counter Offers.   The numbers highlighted in red clearly indicate what changes with each counter and most importantly, how they affect the seller’s bottom line.   The line items in yellow are calculated based on the sales price, so they will also adjust slightly if the price changes.

So let’s look at a real life example:

The list price of a property is $200,000 and reflects a net proceed of $54,638.  The property owners actually received an offer for $190,000, with $2000 in seller closing cost assistance and a $400 warranty to be provided by the seller.  If accepted, this offer would net them $42,783.  The sellers counter back, increasing the sales price to $198,000, lowering the seller closing cost assistance to $1000 and decline to provide the warranty.  The buyers accept this counter offer so after all expenses and the mortgage payoff is subtracted, the sellers can expect to receive a check at the closing table for approximately $51,683. 

sample offer net sheet

When you know and understand the numbers, they aren’t nearly as scary!  Sellers love how easy it is to keep track of their bottom line when this net sheet accompanies each counter!

Want to know more about the true value of your home and how much you can expect to make off of the sale?  Give us a call!

Avoid the Most Common Buyer Errors

February 7th, 2017

Avoid the Most Common Buyer Errors

Buyer Errors StressShopping for a new home is an emotional experience. It’s also time consuming and comes with a myriad of details. Some buyers, however, caught up in the excitement of buying a new home, tend to overlook some items. Their home purchase turns into an expensive process. These errors generally fall into three areas:

  1. Paying too much
  2. Losing a dream home to another buyer
  3. Buying the wrong home

 


Avoid these costly errors with our tips and tricks:

  1. Error: Bidding without sufficient information
    What price do you offer a seller? Is the seller’s asking price too high? Is it a deal? Without research on the market and comparable homes, you could lose thousands of dollars. Before you make that offer, be sure you have researched the market. A professional realtor, can offer an unbiased opinion on the value of a home, based on market conditions, condition of the home and neighborhood. Without knowledge of the market, your offer could be too much. Or worse, you could miss out on a great buying opportunity.
  1. Error: Buying a mis-matched home
    What do you need and want in a home? Sounds simple. Yet, clearly identifying your needs and bringing an objective view to home shopping, leaves you in a better position. Sometimes, home buyers buy a home that is too large or too small. Perhaps they didn’t consider the drive to work, the distance to school, or the many repair jobs waiting for completion. Plan ahead. Use your needs list as a guideline for every home you view.
  1. Error: Unclear title
    Before you sign any document, be sure the property you are considering is free of all encumbrances. As part of their services, a realtor can supply you with a copy of the title to ensure there are no liens, debts, undisclosed owners, leases or easements.
  1. Error: Outdated survey
    Before the purchase is completed, an updated survey is essential. This report will indicate boundaries and structural changes (additions to the house, a new swimming pool, neighbor’s new fence which is extending a boundary line, etc.).
  1. Error: Unexpected repairs
    For $300 – $500 a professional inspector will conduct a thorough inspection of the home. This way, you’ll have an idea of the cost of future repairs. Make the final contract subject to a favorable report.
  1. Error: Shopping without pre-approval
    It only takes a few days to get financing pre-approval. When you are shopping for a home, this gives you more power. A seller is more likely to consider an offer from a serious buyer.

Looking for more information to equip yourself for your big purchase??

Check out our Buyer’s Toolkit!

Critical Considerations for your First Home Purchase

February 1st, 2017

Thinking About Buying Your First Home?

Keep these critical considerations in mind:

How long you plan to live in the home.

First Home BuyersIf you purchase a home and get a job transfer or decide to move after only a short time, you may end up paying money in order to sell it. The value of your home may not have appreciated enough to cover the costs that you paid to buy the home and the costs that it would take you to sell your home.

The length of time that it will take to cover those costs depends on various economic factors in the area of the home. Most parts of the country have an average of 5% appreciation per year. In this case, you should plan to stay in your home at least 3-4 years to cover buying and selling costs. If the area you buy your home in experiences an economic upturn, the length of the time to cover these costs could be shortened, and the opposite is also true.

 

How long the home will meet your needs.

What features do you require in a home to satisfy your lifestyle now? Five years from now? Depending on how long you plan to stay in your home, you’ll need to ensure that the home has the amenities that you’ll need. For example, a two-bedroom dwelling may be perfect for a young couple with no children. However, if they start a family, they could quickly outgrow the space. Therefore, they should consider a home with room to grow. Could the basement be turned into a den and extra bedrooms? Could the attic be turned into a master suite? Having an idea of what you’ll need will help you find a home that will satisfy you for years to come.

 

Your financial health – your credit and home affordability.

Is now the right time financially for you to buy a home? Would you rate your financial picture as healthy? Is your credit good? While you can always find a lender to lend you money, solid lenders are more skeptical if your credit history is not good. Generally, a couple of blemishes on a credit report will make you a good credit risk and could qualify you for the lowest interest rates. If you have more than a couple of blemishes on your report, lenders like Quicken Loans may still provide you with a loan, but you may just have to pay a higher interest rate and fees.

Some say that you should refrain from borrowing as much as you qualify for because it is wiser not to stretch your financial boundaries. The other school of thought says you should stretch to buy as much home as you can afford, because with regular pay raises and increased earning potential, the big payment today will seem like less of a payment tomorrow. This is a decision only you can make. Are you in a position where you expect to make more money soon? Would you rather be conservative and fairly certain that you can make your payment without stretching financially? Make sure that whatever you do, it’s within your comfort zone.

To determine how much home you can afford, talk to a lender or go online and use a “home affordability” calculator. Good calculators will give you a range of what you may qualify for. Then call a lender. While some may say that the “28/36” rule applies, in today’s home mortgage market, lenders are making loans customized to a particular person’s situation. The “28/36” rule means that your monthly housing costs can’t exceed 28 percent of your income and your total debt load can’t exceed 36 percent of your total monthly income. Depending on your assets, credit history, job potential and other factors, lenders can push the ratios up to 40-60% or higher. While we’re not advocating you purchase a home utilizing the higher ratios, its important for you to know your options.

 

First Home SavingsWhere the money for the transaction will come from.

Typically homebuyers will need some money for a down payment and closing costs. However, with today’s broad range of loan options, having a lot of money saved for a down payment is not always necessary – if you can prove that you are a good financial risk to a lender. If your credit isn’t stellar but you have managed to save 10-20% for a down payment, you will still appear to be a very good financial risk to a lender.

 

The ongoing costs of home ownership.

Maintenance, improvements, taxes and insurance are all costs that are added to a monthly house payment. If you buy a condominium, townhouse or in certain communities, a monthly homeowner’s association fee might be required. If these additional costs are a concern, you can make choices to lower or avoid these fees. Be sure to make your realtor and your lender aware of your desire to limit these costs.

 

If you are still unsure if you should buy a home after making these considerations, you may want to consult with an accountant or financial planner to help you assess how a home purchase fits into your overall financial goals.

 

The Sweet Smell of a Successful Sale

January 31st, 2017

The Sweet Smell of a Successful Sale


perfumeScents and aromas can have a dramatic impact on people’s emotions and overall experience of a space. (Otherwise, there wouldn’t be a multi-billion-dollar fragrance industry!)

Don’t ignore the power of fragrance when showing your home. Smoke, pet odors, and cooking smells can each dramatically impact how potential buyers feel about your house. If your potential buyers never form an emotional connection to your home, chances are that they will remain just that – potential buyers.

Don’t allow smoking in your house for weeks leading up to showing it, find a pet-sitter for a few days, and clean, clean, clean! You also want to keep in mind what foods you may be preparing while showings may be scheduled. It’s probably best to avoid fish, fried foods, and anything with a heavy, lingering scent. If it doesn’t smell “great” to the potential buyers, they may form an generally poor impression of your home.

Once you’ve removed any aromas that might be off-putting and freshened the air in your home, perhaps you should also be thinking about how you can use scent to your advantage. Bath & Body Works’ White Barn plug-in scent “Kitchen Spice” is very popular with our buyers and sellers. Spraying products like “Oust” or “Febreze” also helps to get rid of pet odor — and don’t forget to keep the litter box extra clean.

Woman in kitchen.You could also consider doing some baking prior to showings. The scent of fresh apple pie is hard to beat when it comes to creating the atmosphere of a welcoming home! — But who has time for that!  Baking a few refrigerated cookies will accomplish the same goal– plus you can leave them out on the counter for your guests during the showing!

TIP: In a pinch, a mixture of water, vanilla extract, and brown sugar in an oven on low heat can be used to create the pleasing aroma of fresh baking.


Remember: Buyers often make purchase decisions based on their emotional response, so it’s important to make it easy for them to fall in love with your home. Pleasant smells are one more way to do so.

 

Buyer Toolkit – what DO you need?

January 27th, 2017

Buyer’s Toolkit

What do you need to make the most informed, successful home purchase??


Your Team

set of tools on toolbox isolated at white background

Your Agent

A successful purchase starts with the right representative. In fact, once you’ve selected the best agent to represent you, it is likely that he or she can recommend other professionals to join your team, taking more of the responsibility off your shoulders.

Lender (Appraiser)

A bank is not just a bank. Having the right backer can be extremely important – it is your money we’re talking about after all! Make sure that your lender and financial representative is someone with whom you feel comfortable, and be wary of any lender who promises you more than you think you can reasonably afford. Your lenders may or may not require an independent appraisal, and typically will make arrangements for the appraisal themselves.

Home Inspector

No home inspection is 100% guaranteed, but a few hundred dollars to catch a major problem now is certainly better than many thousands to correct that ‘surprise’ down the road. Ask your agent for a recommendation.

Contractor

Planning some renovations? You’re not the only one! The home renovation industry is booming, and in some markets, booking a contractor must be done months in advance (that’s a long time to go without a kitchen). Don’t let finding the right contractor slip through the cracks – planning ahead will almost certainly make your renovation smoother, and you contractor will appreciate the advance notice.


Attractive young adult couple looking at house plans.

Your Plan

  1. Find the right representative

Even if you’re not quite ready to buy, your buyer’s agent can be an absolute wealth of information, and can often offer ‘scoops’ on local developments you might not have known about otherwise.  Speak to your agent first and he or she can be helping to guide you right from the start.

  1. Find out what your price range is

Online mortgage calculators are a good place to start, but as you get closer to being ready to buy, there is no substitute for a written mortgage pre-approval.  Just speaking to your lender is an extremely worthwhile venture – this is the only way to really get an in-depth picture of your overall financial picture and to discover exactly what you can reasonably afford to spend on a home (and possibly on renovating).

  1. Find out what your local market looks like

The internet can be incredibly valuable in doing preparatory research.  Start with your agent – he or she can direct you to valuable resources and immediately start e-mailing you real estate listings that may interest you (or at least give you a better idea of what your needs and wants are).

  1. Find out what your true needs and wants are

Compose a needs/wants list that takes into consideration your local market conditions, your price range, and the advice of your real estate agent.

  1. Find your dream home!

Once you’re ready to act, you may be surprised by how quickly you can make a decision.  Armed with your pre-approval, a little market knowledge, and your needs/wants list, call your real estate agent, hit the pavement, and when you see ‘the house’, put in an offer.

 


 With the right team behind you, it really can be that easy!

 

Great Listing Agent Interview Questions

January 26th, 2017

Steve and Tonda Hoagland listing agents Keller WilliamsIt’s always surprising how many people think “all real estate agents do the same things”.  

Do you know that 6% of the agents do 94% of the business?  Make sure you’re hiring one of the 6%!  These agents are in the game everyday.  They are experienced.  They know the industry and the market.

Many buyers and sellers either use a family member, friend, or someone they stumbled across at an Open House. While those people may truly be a great choice, buying and/or selling a house is a huge financial investment.  You should select your agent with the same care you would use for any other major life decision.

Our best advice? Interview several agents/teams before deciding who will do the best job for you!


Here are some great questions to ensure you’re hiring a true expert. (Feel free to print this out!)

1.) How long have you been in residential real estate sales? Is it your full-time career?

2.) Who is your backup in the event of illness, vacation, or personal time away?

3.) How many homes did you and your real estate brokerage sell last year?

4.) How many days does it take you to sell a home? How does that compare to others?

5.) What’s the average variation between your initial listing and final sales price?

6.) What specific marketing systems and approaches will you use to sell my home?

7.) Do you use social media marketing such as Facebook, Twitter and Pinterest to reach potential buyers?

8.) Is a virtual tour included in your marketing plan for my home?

9.) Who takes the property photos?

10.) Have you sold or shown homes in my neighborhood?  How does mine compare?

11.) Can you recommend service providers who can help me obtain a mortgage, make home repairs, etc?

12.) How will you keep me informed about the progress of my transaction?

13.) Could you please provide the contact information for three recent clients?

14.) Do you have an administrator or personal assistant?

15.) Can you show me how to make my home more marketable?

16.) When a buyer calls on my home will you ALWAYS be the one they communicate with?

17.) Do you have a feedback system and if so, how does it work?

18.) Have you ever been fined by the Metropolitan Indianapolis Board of Realtors?  If yes, how many times and why?

19.) How much do you charge to sell my home and why?

20.) Do you have additional fees not included in the quoted commission?

21.) Will you allow me to terminate the listing contract if I am not completely satisfied?

22.) How readily accessible are you? Will I have your cell phone number?

23.) Do you have a written document that details precisely what services you intend to provide?

 

Think you’re interested in HUD / Bank-owned Properties??

January 26th, 2017

What should you know?

HUD Homes, Bank-Owned, Pre-Foreclosure, Short-sales… What are we talking about here??

Wooden house with a red price tag

HUD Homes

These properties have already been through the foreclosure process and are placed on the market by HUD (The Department of Housing and Urban Development).  They are vacant, sold “as is” and ready for immediate occupancy.  Although they are advertised in the MLS, they are purchased through an on-line bidding process.  The first 10 days a HUD property is on the market, only buyers who plan to live in the home are able to place a bid.  All bids must be placed through a real estate agent.  Down payment of $100 is available if you plan to live in the property and use FHA financing.  (not investors)

Earnest money deposits must be in the form of a cashiers check and require a minimum of $1000 on all listings over $50,000 and $500 on properties $50,000 or less.  Lender Pre-approval letters or proof of funds for cash purchases must be submitted with all offers.  If a suitable offer is not accepted during this initial bid process, it is then open to investors.  Although the bidding process moves quickly, allow a little longer to close than on a normal real estate transaction.  HUD purchases are not usually a good match for buyers who need to be in a home within a certain time frame. To learn more details about how to buy a HUD property, visit HUD.gov.  

 

Bank-Owned/Corporate Owned

Bank-owned homes (often called REO properties) have also been through the foreclosure process and are currently owned by a bank or corporate investor.  They are sold “as is” and are vacant and ready for occupancy.  They are normally listed on the MLS and are viewed through a Realtor. 

Offers are made the same as on any other property.  The banks will require a lender pre-approval letter or proof of funds (cash offers) be submitted with all offers.  They are not likely to entertain an offer with contingencies.  For example, you cannot expect them to accept an offer contingent on the sale of another home.  It may take several days for a bank to respond to an offer depending on the individual bank, so a little patience goes a long way.  Closing may or may not take longer than an ordinary transaction; again, it depends on each bank.  Find Foreclosure Properties in Indiana

 

Old calculator - mortgagePre-Foreclosure/Short-sales

Contrary to what you may think, short-sales do NOT mean they are quick! Short-sales/Pre-foreclosure listings take place when the sale price of a home is less than the outstanding mortgage balance on the property, thus “shorting” the lender.  Usually the homeowner is behind in payments and cannot afford to keep the home; but, also can not afford to sell the home because of the loss of equity (often due to 2nd mortgages) and expenses involved with the sale of a home.  In a short-sale situation, the homeowner still retains title to the property, but all offers are contingent on their lender’s approval. 

Sellers must submit a hardship/short-sale package to the bank for their consideration.  The bank will review the package and decide if they will accept less than the total due, thus the name “short-sale”.   The bank usually allows and even prefers the homeowner to remain in the home until the sale is completed. 

These homes are listed on the MLS and may include the words “short sale” or “pre-foreclosure” in the property description section.  They are usually sold “as is”.  Offers are written with a Realtor in the same manner as a normal property. The homeowner can accept or counter the offer.  Once agreement is reached with the homeowner, the offer is then sent to the bank for their approval.   It’s important to note that lenders will not consider most contingencies.  For example, you cannot expect them to accept an offer contingent on the sale of another home. 

Banks are currently overwhelmed with short-sale offers and may take as long as several months to respond to an offer, although local banks tend to move much quicker than large national lenders.  Short-sales can be great values, but they require patience and can be very frustrating. It’s possible you may wait for several weeks, only to discover the lender has accepted another offer because they often continue to market the property and take additional offers until they make their decision.  Then once the bank finally accepts a short-sale offer, the buyer must be prepared to move very quickly as the bank may require the transaction to close on a shorter timeline.

 

Other Questions?

What is a “distressed” property?

A distressed property is one that is listed for sale as either a short-sale, pre-foreclosure, foreclosure, or (possibly) as an estate sale. These properties typically sell for less than full market value due to work needing to be done, “as-is” status, or desire of the sellers to sell quickly. Appraisers take this information into account when appraising other comparable properties.

What does “As-Is” mean?

The buyer still has the right to have the home inspected so they know if there are any serious defects, but the bank or homeowner will not be making any repairs to the property.

How can a property be inspected if the utilities are off or it’s been winterized?

The buyers must pay to have the utilities turned on and also pay to have the property de-winterized and usually re-winterized.

What is “winterized”?

A professional has turned off power & water to the home and put anti-freeze in the water lines in order to keep the pipes from freezing while the home is without power.

 

Contact Us for answers to additional questions regarding distressed properties, or any real estate related questions. We’ll update and post answers here to share with other website visitors.

Do You Have Fixer Upper-itis?

September 21st, 2016

Fixer Upper-itis.  That sounds contagious, maybe even dangerous! Lots of people have it — I know we’ve been bitten by the bug, and you may have too!

It begins so innocently.  You’re just relaxing on the couch watching Chip and Jo do their amazing transformations and then you start thinkingI could do that!.  (Sound the scary music!) You have just been infected with the latest disease sweeping across the country — Fixer Upper-itis!

Right?  I mean, how hard could it be to take that ugly house nobody wants and make it beautiful? Oh, and it looks like fun….I’m my own boss…people will hug me and love what I do….and I can make a LOT of money, maybe even be on TV!

This is exciting – I’m ready to get started!

Portrait of a happy young woman thinking about something while touching her chin with finger, isolated over white

Hey — First I should get a video made of demolition day.  Everybody likes demo day!  We should document it for the world to see after I become a huge success!

Next?  Where does the sliding barn door go?   How do I get my hands on some shiplap?  What walls should I take down to open things up?  Should I buy a nicer hammer and some fresh blades for my saw?  Who has a truck I can borrow?

Oh, yes….and I will need a house.  Reality begins to seep in.  Maybe this isn’t as easy as it looks!

How do I find a house to fix up?

How do I pay for a house?

How do I pay for improvements?

How long will it take me to do the work?

Should I have others do some of it?

How long will it take to sell it?

What expenses are involved that I don’t even know exist?

And then it hits you.  This sounds a little risky — maybe “a lot” risky!

It can be, but if done correctly, there is also opportunity for great reward.  Give us a call.  We can answer your questions and walk you through the process.

Oh look!  Property Brothers is coming on next.  Isn’t one of them a realtor…?

 

Enjoy “Before and After” pictures? — Check out our Pinterest Board.

8 Things You Must Know BEFORE Purchasing a Condo

August 31st, 2016

So you’re thinking about stepping into the carefree life of condo living!  Awesome!  Indianapolis and the surrounding areas have lots of great options.

Lockerbie Glove Factory

       Lockerbie Glove – Downtown Indy

Whether you’re thinking about purchasing a condo in the heart of Indianapolis, or an over 55 community in the burbs — It takes additional due diligence to ensure a condo purchase is a sound investment.  The last thing you want is to buy a great new place and then discover the Home Owner’s Association (HOA) is bankrupt or are requiring each homeowner to pay a special assessment to cover needed repairs – yes they can do that!

Having helped many buyers successfully navigate condo purchases all around Indianapolis — here are our top “go to” questions that help our buyers ensure they are making a sound investment that is also the perfect fit for their lifestyle.

  1.  Is the HOA Financially Solvent? 

Condo associations usually care for the exterior maintenance of the building, yards and common areas.  It’s essential they have a financial reserve in order to make needed repairs down the road.  If they are short on funds to make improvement they may issue a “special assessment” in addition to the monthly HOA fees.  This can be thousands of dollars and it has to be paid before the owner can re-sell the property.

2.  What is the percentage of rentals to homeowners who reside in the complex?

This is a good indicator of both the stability and atmosphere.  Are you looking for a quiet community or are you ok with renters who are often younger and may be more likely to keep late hours or throw loud parties?

3. Do they have a community newsletter?

If so, request a copy of a recent issue.  This is a great way to find out what’s happening in the community, including activities and condo owner concerns.

4. What Covenants and Restrictions apply?

Get a copy of the Covenants and Restrictions and READ them!  They are usually more detailed than your run of the mill neighborhood restrictions.  For instance… What are the monthly fees and what is the procedure for raising them?  Are you allowed to have pets?  Where do guests park?  Do you have assigned parking spaces?  Are there noise restrictions?  Can you rent the property? What exactly does the HOA maintain?  (Often windows and doors are the home owners responsibility, even if the association maintains the exterior of the building.)

5. What is the turnover rate and length of time on market?

High turnover and or long days on market may signal there are issues or you may also have difficulty selling down the road.

6.  Is the complex on the FHA approved condo list?  

Even though you may be purchasing with cash or using a conventional mortgage, many buyers rely on low down payment FHA loans.  If the community is not on the FHA approved list, it may be more difficult to re-sell the condo.  There are even a few condos that don’t qualify for conventional financing.

7.  Is there an on-site property manager?

It’s great to know that there is someone located at the community who keeps an eye on things and is quick to respond to any issues.  Of course a full time on-site manager may also mean higher monthly fees.

8. What do the neighbors say?

Get the real scoop! People love to talk about where they live.  If they love it, you probably will too!  If they don’t… you may want to reconsider.

If you’re considering carefree condo living — make sure you’re guided through the process by someone who understands the unique circumstances surrounding a condo purchase.  It’s a huge investment.  Let’s make it a good one!



All Information believed to be reliable but not guaranteed and should be independently verified. All properties are subject to prior sale, change, or withdrawal. Copyright © 2017 Metropolitan Indianapolis Board of REALTORS®. All rights reserved.