Step three, assemble house?
March 22, 2010 8:01 PM   Subscribe

I want to pay cash for a lot, then have a modular house put on it or have one built. Have any MeFites done this, and what sort of books or people should I be referencing for getting started?

(All of the following is in Texas)

I've looked into modular house builders in Texas and there's one I plan to visit tomorrow. Modular (or industrialized) housing is legal in any single family zoning in Texas, and this is confirmed by my city.

Questions I have:

- Would a real estate agent be willing to work on the actual purchase? We're talking a land price of less than $20,000, so the usual 3% commission from the seller would be $600 or lower. However, the property is listed by a broker, and I want my own because:

- The property in question is currently zoned for local business. It appears to be a leftover zoning from when there was one long tract of land on the nearby road, but has since been subdivided into housing lots. Is writing up an "option period" (if that's the right term) for asking the city to change the zoning--since the lot is advertised as residential--something a real estate agent can do, or do I need a lawyer?

- Whether I go modular or site built, who do I need to hire to do things like get the utilities connected to the interior of the site (the lot looks like a mailbox flag, i.e. a long "driveway" connecting to the square of the lot, all of which is surrounded by other houses or a community center) and a foundation and driveway poured? Is this someone a real estate agent can refer me to?

- I believe I can pay cash for the lot's purchase price, but is it like a "normal" house purchase where I need a title policy and a survey?

Beyond that, are there other questions I should be asking? If all or most of these can be answered by a professional of some stripe, I'll gladly talk to them.
posted by fireoyster to Home & Garden (6 answers total) 4 users marked this as a favorite
Taking your questions in order:

Having your own broker is a good idea. You may have to pay your broker a flat fee rather than a commission, so decide what his/her services are worth and offer that amount.

The problem you face with an option is from the seller's standpoint what happens if you decide to back out after you have messed with his zoning? I would first check with the city to see if a single family residence can be built and occupied in the current zoning without further city approval. If so, get it in writing!

If you need to get a zone change, you need an attorney to prepare an option or contingency sale offer. A broker is knowledgeable, but does not have the expertise to create a litigable document.

With your apparent skill sets, it would be wise to hire a general contractor to do whatever the modular housing provider doesn't do. Get a clear description from the modular housing people of exactly what they will and won't do. Get a GC to make and all-inclusive bid for the things not done by the modular folks. This might include grading the lot for drainage, installation (from the street) of utilities, trenching for and installation of footings, etc., etc.

Yes you definitely need a title policy as you will be borrowing money (?) to pay for the house and lot improvements. The seller should provide either the survey and/or whatever the title company requires to insure title for the lender. This would be an ALTA policy.

I would talk to a civil engineer to determine whether the lot drains properly, where the utilities are and whether there are any site issues that you can't readily identify.
posted by Old Geezer at 9:51 PM on March 22, 2010

Thanks for all the details, O.G. Maybe option wasn't the right term, your use of contingency sounds right. Sadly, a single family residence can't be built on a local business-zoned lot. Basically, I'm looking for a setup where I'd get a bit of time up front, say 14 days, to do my inspections. If that works out, then the seller is committed to sell, and I am committed to buy, as long as the city changes the zoning.

I would be buying the property (with cash) first, then getting the house placed (with a mortgage) at a later date. At what point would I buy the title policy? I would assume (hah) at the time of purchasing the lot. Ideally, I'd buy the lot, then save up again to pay the general contractor for the land work, then borrow money just for the house itself. Some modular companies include a foundation, but I don't know if this one I'm visiting tomorrow does.

Your advice is greatly appreciated. I will start perusing the yellow pages for a civil engineer and GC if the modular builder works out.
posted by fireoyster at 10:35 PM on March 22, 2010

I know sweet-pea all about your zoning legislation, but if this were me I would ring up the local authority and posit a hypothetical question something like: If I was to buy a block of land currently zoned under XX, how hard would it be to get it rezoned into YY. See what they say and work from there.
posted by Kerasia at 2:45 AM on March 23, 2010

I asked a similar question here, just fyi.
posted by dobbs at 7:08 AM on March 23, 2010

It almost seems like a real estate attorney is the right person to help you with what you want to do. A broker (sorry, BrokerĀ®) can only do so much, and what you (seem to) need is a contract that requires the zoning change as a condition of closing.

Also, what happens when a garbage truck and nitroglycerin factory opens up next door?
posted by gjc at 7:12 AM on March 23, 2010

What's the cost of hooking up to existing water/sewage, or installing septic? The cost of a new electric hookup may also be pretty high. Budget for site prep, foundation, driveway, landscaping, permits/inspections, etc. The house itself is only part of the cost.
posted by theora55 at 7:47 AM on March 23, 2010

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