Investor · Boston, MA · Member since 2016 · 73 posts · 18 votes
I own a sinkhole SFH in Florida. I bought it as a cash flow property and have been very happy with it as an investor.
At this point I would like to sell it, and my realtor is saying that it’s marketable only to investors since owners/occupiers will not be able to get a conventional mortgage (and the insurance will be prohibitive).
@Lydia S. about 20 years ago there were a lot of houses that had cracks in the foundation and owners filed insurance claims with their insurance companies to collect money to fix settlement issues. In many cases the homeowners collected the insurance money and did nothing to correct any (usually normal) cracks.
I bought a house that was marked as having these issues, which means it usually goes for 15-20% less than market value, which is fantastic for investors, as the rent it brings in is the same as non blemished houses. The inspection came back perfectly clean and there were no issues with the house.
Now that I want to sell it, I am being told that since the house has unmitigated settlement, that banks will not provide mortgages or insurance to buyers. Guess it makes it perfect for a flip since you can get it cheaper, deal with removing the blemish of "settlement", do a quick reno and put it back on market and collect that margin :)
As a remote investor I'd rather just sell it and not deal with the renovation.
If the home does not have any existing liens outside of the mortgage that is being replaced, I don't see why owner occupants would be unable to buy. Maybe i'm missing something? As long as the prospective buyer accepts the deficiencies identified in the inspection, and the sales price is in line with the appraisal (or the buyer is willing to pay the difference), there should not be any issues here.