FreeIPA Domain Name Resolution Issue – How to Resolve FreeIPA Installer Problems

I have been having an issue while installing FreeIPA. The problem is that every time I run the installer the FreeIPA application does not read from the host file rather tries to resolve the domain name (my machine's hostname) with a DNS query. I'm Working with CentOS Linux release 7.3.1611 (Core)

Following are the entries in my /etc/hosts file :

[root@ipa ~]# cat /etc/hosts
127.0.0.1   localhost localhost.localdomain localhost4 localhost4.localdomain4
::1         localhost localhost.localdomain localhost6 localhost6.localdomain6
192.168.28.5 ipa.example.com ipa

Entries in /etc/resolve.conf

[root@ipa ~]# cat /etc/resolv.conf 
# Generated by NetworkManager
search example.com

If I add a DNS entry in the above, the domain example.com is resolved from that DNS and following error is observed as would be expected if an external DNS is queried.

Please provide a realm name [EXAMPLE.COM]: 
Checking DNS domain example.com., please wait ...
ipa.ipapython.install.cli.install_tool(Server): ERROR    DNS zone example.com. already exists in DNS and is handled by server(s): a.iana-servers.net., b.iana-servers.net.

So I choose not to add a DNS and use an empty resolve.conf file as shown above. I have also tried setting the nameserver to my machines IP but to no luck.

To get it to force read from my hosts file I changed the nsswitch config to only read from the hosts file but that was still in vain. kindly see below the my /etc/nsswitch configuration.

[root@ipa ~]# grep hosts /etc/nsswitch.conf
hosts:      files

Running the installer

[root@ipa ~]# ipa-server-install --setup-dns -a <passwd> -p <passwd>

now with the current config returns the following :

Please provide a realm name [EXAMPLE.COM]: 
Checking DNS domain example.com., please wait ...
Please provide the IP address to be used for this host name:

So again, the hosts file was ignored and installer asks for an IP against the domain.

Following are some test which show hostname to IP resolution is succesful

[root@ipa ~]# ping ipa.example.com
PING ipa.example.com (192.168.28.5) 56(84) bytes of data.
64 bytes from ipa.example.com (192.168.28.5): icmp_seq=1 ttl=64 time=0.126 ms
^C
--- ipa.example.com ping statistics ---
1 packets transmitted, 1 received, 0% packet loss, time 0ms
rtt min/avg/max/mdev = 0.126/0.126/0.126/0.000 ms

[root@ipa ~]# getent hosts ipa.example.com
192.168.28.5    ipa.example.com ipa

[root@ipa ~]# telnet ipa.example.com
Trying 192.168.28.5...

Apologies for the long post, I'm quite stuck with this and I'm having trouble figuring out what I'm missing. Any assistance on this issue would be greatly appreciated. Thankyou.

PS : The setup is not for a live environment, its for testing purposes.