December 17, 2018
Considering the Investors-Only Short Sale
Occasionally one will encounter a listing labeled an “investors-only” short sale. This can at times turn prospective home-buyers away, believing they are ineligible to put in an offer on such a property. In truth, this is not the case; but there are certain qualifications in order to take title to this home that a residential real estate investor is more likely to meet than the standard home-purchaser.
Since short sales are generally “as-is” sales, requests following an inspection (which should be performed nonetheless) are limited and sometimes simply out of the question. The seller is already in a state of financial distress, and won’t be able to spend money on repair; moreover, the lender who has agreed to the short sale won’t be willing to take a hit to its already diminished prospects of profit to grant a buyer repair-allowances—better, in the lender’s view, to simply put the home through foreclosure.
There’s also the fact that short-sale homes listed as “investors-only,” again as a result of the seller’s financial distress, are at increased likelihood of being in a state of disrepair, which can often disqualify them from availability for standard owner-occupant lending. Such forms of disrepair may include roof damage; infestations by structurally-damaging pests such as termites; lack of a kitchen or a bathroom; walls or foundations in a state of disintegration; or its location in zones of likely disaster such as mudslide, lava, or avalanche; among others.
As these conditions make the home ineligible for mortgage, the taker of such a property is most likely to make the purchase as a cash buyer. And experienced investors are much more likely to be able to put cash forward for purchase of such a home, and then to fund the necessary repairs, than are potential owner-occupant buyers.
In the end, however, if one is looking to buy a home to occupy, has the cash on hand to do so, and expects to put plenty of time and/or money into its repair, there is no reason the label of “investors-only” should be considered to put the property off-limits.
If you’re looking to make a cash-buyer purchase of a short sale property in Pensacola, Florida; Providence, Rhode Island; Duxbury, Massachusetts, or any other city in one of these three states, give us a call. Here at Topouzis & Associates, P.C., we’re experienced at title searches and title curative services, and we are supported in supplying title insurance by numerous underwriters. We’ll put our vast experience to work for you, ensuring clear sailing through the closing process and beyond.