What does it mean when homes will not qualify for a mortage?

Question

I have seen a few homes that have in the listing that it will not qualify for a mortgage.  Usually a cash only deal. Does that mean it is something extremely wrong with the house? Is this something to completely avoid?

Charity Woods · Answer

@Leon Chappell, @Steve Vaughan is right. The home will not qualify for a mortgage because it is considered a bad investment to the bank due to repair issues. This makes a great investment for us, the investor. We know that this is a home that will have less offers as it is not marketable to most end users. Generally, you are able to get a better price and hence maximize profit.

So if you are planning to flip, go after it!!!! If you have other plans, be cautious and realize that you will have to either use cash or hard money to purchase.

Good luck!!!

Charity

Steve Vaughan · Answer

@Leon Chappell - yes, in general a non-bankable property has condition issues.  Could be as simple as a roof or complex as the foundation.  The smart investors (I'm not one in the fixer space) know which issues are easily repaired and buy those houses.  They buy for cash at steep discounts, repair the issue and sell or refi.

Hopefully experienced flippers will chime in.  I'm just a B&Her.  Good luck to ya!