Hi community, I have what might seem like a simple question. Let's suppose a person is willing to sell a property that needs significant repair, but he is willing to sell for cash only. What might be the reasons for this and why wouldn't this person be interested in "mortgage buyer"?
What problems/issues might be associated with such a cash purchase for the buyer. They buyer has enough funds to buy with cash but is slightly alarmed that the seller is only looking to sell for cash. Thank you.
A mortgage company is likely to require repairs as part of the deal that could interfere with the seller's plans. A cash "as is" sale can be done in 30 days or less, but a complicated mortgage deal would be longer and could fail in the end.
@Vera Log Financed purchases come with speed bumps for sellers, especially when the property isn't in good shape.
FHA, VA and USDA loans are especially stringent. The appraiser will fail a property for a small amount of peeling paint, a cracked window, wobbly hand rails, crumbly cement steps, etc. They even appraise outbuildings like a tool shed. VA loans also require a wood-destroying insect inspection, which the seller is required to pay for.
In a conventional loan the appraisal is much less detailed. Normally, they want to be sure then house is inhabitable. That means that the major systems are working properly - heat, AC, plumbing, septic, electrical.
In all of those cases the appraiser has to establish a value to be sure that the lender isn't over-lending.
I've had personal experience with VA buyers where the appraiser is on some sort of personal quest to beat the price down in favor of the buyer. I had a property that was under contract at $379,000 (which was strongly supported by comps) with an initial appraisal of $330,000. Upon appeal (Tidewater Clause), I got it up to $345,000. My seller still got screwed, but was willing to bite the bullet as he had another property under contract that his wife was in love with.
In a cash purchase all of those issues go away, so the sale is a lot more likely to succeed.
The one thing a seller doesn't want is to have the house go under contract and then for the sale to fail. That shows up on MLS and the entire world starts to assume that there's something wrong with the property.