Why would a house not be able to be financed?

Found a house that I might want to buy.  Price looked too low.  Drove by and it looks decent from the street and the photos in the ad look decent.  Talked to my agent and she said there are no disclosure forms with the listing, but it has "financing not available" in the remarks section on the part of the listing that only agents can see.  House is currently occupied.  I know stuff like no heat, no stove will prevent an occupancy permit.  House is too new to be lead paint.  Was transferred as a "family" sale 5 years ago. 

The two ideas that popped into my head, but I'm not certain about are:

1.  It is located about 1/2 mile down a private drive that crosses several properties with different owners so I'm wondering if there is no deeded access.  Looks like it all used to be owned by one person/family and now several pieces have been sold off and had houses built over the last 30 years. 

2.  It looks like there has been an addition - maybe that was not permitted?

What else could it be? 

My agent has a call in to the listing agent, but I doubt we'll hear back before tomorrow...

Even with people living in it, is it a foreclosure? What is water and sewage access like since the big property was sub divided? Bank owned short sale? History of or noticeable structural damage?

After almost getting my mortgage turned down because the appraiser WHO DIDN'T EVEN GO IN THE berkeleyING HOUSE saw water spots on ceiling tile in a picture, it could seriously be anything. There are electrical lines over the ceiling tile btw, they are just 40 years and 4 kids old, so of course they're stained. 

Is there a lien on the property, or a massive tax bill? Those could also affect financing.

Cooking Meth?

HUD

No clear title?

Beware. I once bought 2.75 acres that magically went down to 0.45 acres because the county never updated the land parceled off to a daughter to buy another house. If you proceed, gey a survey, title search, etc. But don't proceed.

Around here if the house has a documented history as a grow-op it can make financing and insurance really hard to get. Our local police department publishes a list of these houses on their website, as do a number of other in the province.

We had a family friend who couldn't sell his house because it had a sod roof and no bank would finance it.  Not sure if the green movement has loosened up that sort of thing. 

Based on location etc.  I doubt past use as a drug house is likely.  Photos look current and nothing noticeably problematic in them.  Based on family land etc. It could be a foreclosure or short sale, but it's through a "normal brand name" real estate agency.  The foreclosures I have looked into in the past have been through an "unbranded" agency. 

I'm guessing it is somehow a documentation issue like I put in the initial post, but just trying to get ideas on what it could be.  I guess a shared well or septic system could also be a potential issue? 

I haven't gotten to the point of putting any $ into anything.  I haven't even been inside it yet.  Just found the listing late last night and did a drive by this morning.  Then I contacted my agent and she responded within an hour that she was working on it and had called the listing agent and left a message.  She also let me know about the not able to be financed but no disclosure forms in the info she could see that the general public can't access.  Owner has opted out of the online tax map system, so no info there other than owner name and the property address.  I will exercise due diligence and have survey, title search etc. done if it goes that far.

When we bought our house we were told that it couldn't be financed until septic was brought up to code. We paid with alternate financing so it all worked out. We got a great deal because in order to sell with financing the house would have to go under contingency contract which would let the owner borrow money to get it up to code and only when things got fixed would the house go under normal contract. It was a mess, so it was cheap. 

In reply to secretariata (Forum Supporter) :

Real Estate is a snake-filled business so with that in mind my guess will be that the listing agent has intentionally, wrongly marked the house as financing unavailable.  Probably because the listing agent has a buyer in mind and is trying to keep others from acting on the house.  

Another reason for no disclosure forms... 

In general, a disclosure form typically says, "what problems are you aware of from your time living in this house?"  If the seller inherited the house, and never lived in the house then their answer is, "I have nothing to disclose; I never lived here."  

So, this leads me to wonder if there is an issue of who really owns the house and therefore who really has the right to sell the house.  Add in enough of that confusion and a bank will not want to get involved.  

Financing not available means there is something wrong, and not something small.  Something big enough that no house lending company in their right mind would loan money on it.  If you are interested in the house regardless, ask the owner why.

Based on the listed price I wouldn't need financing and I don't know for sure that financing is not possible.  It isn't mentioned anywhere in the ad.  Apparently the listing agent put that in the comments section on the MLS (I think that is where).  I guess I'll wait to hear from my agent rather than speculate endlessly. I was just trying to get an idea of what the likely reasons were and I would expect that most occupancy permit related issues should be off the table if somebody is actively residing there...

I'm going to come at this from a different angle.  It could mean that the seller doesn't want to offer any kind of financing.  I've been playing with real estate my whole life.  I've purchased houses where the seller acted as the bank too. They didn't want the cash all at once so they made some extra money of holding paper.

Bottom line is that their is something happening that is preventing banks from accepting the liability.  Rather I should say, something that WOULD cause banks from accepting liability.  It's not like every lender has inspected the property and turned it down, but there must be something that the seller/agent knows that would instantly cause a bank to disqualify it.  Being non-financeable due to damage would likely only exist if there was a disclosure document that outlines something that banks don't like, so my guess is some sort of legal snag; title dispute, easement problems, deed problems, short sale pending, etc.... something skeleton in a closet that will become discovered.

I noticed a few in PA when I was shopping where the sellers themselves refused certain kinds of financing, or refused any financing at all.  I didn't think that was legal, but it happens.  Kinda like if you're selling a car and you only accept cash.  I guess their desire is to have a cash buyer to avoid the waiting, or they are hoping you don't notice the crumbling foundation.

jgrewe said:

I'm going to come at this from a different angle.  It could mean that the seller doesn't want to offer any kind of financing. 

came here to say same thing.  

At least here in California you pay for title insurance , 

You pay a title company to check all the records if there are liens , court cases etc and if its clear  they sell you title insurance  which covers you if someone shows up with an unknown lien on the property , 

it could be as weird as mineral rights that someone else owns !

Whatever it is you have to let us know.  I'm engaged now so the suspense is real..

Probably because this is what will happen once the deed is transferred to the new buyer.

 

jgrewe said:

I'm going to come at this from a different angle.  It could mean that the seller doesn't want to offer any kind of financing. 

 

 

I don't understand this, it's not like the seller is doing the financing.  When a bank gives the buyer a mortgage the seller gets a check at the time of closing.  So they receive full payment (minus any loan amount they have) at the time of sale. 

The no financing thing can't be coming from the seller, it has to be bank driven, which means there's something seriously amiss about this property.

docwyte said:

 

jgrewe said:

I'm going to come at this from a different angle.  It could mean that the seller doesn't want to offer any kind of financing. 

 

 

I don't understand this, it's not like the seller is doing the financing.  When a bank gives the buyer a mortgage the seller gets a check at the time of closing.  So they receive full payment (minus any loan amount they have) at the time of sale. 

The no financing thing can't be coming from the seller, it has to be bank driven, which means there's something seriously amiss about this property.

Well, it could be coming from the seller if they know or suspect there are issues that will need to be resolved for the property to be financed.  They could be looking for a quick, all cash, "as-is" sale.  You wire the funds they sign a quit claim deed, period.  That certainly does not mean there isn't something seriously amiss.  There are reasons mortgage lenders require inspections and title insurance exists, but neither are actually required to transfer ownership of real estate.

They are looking for a cash buyer.  My daughter does this all the time.  For  some reason the house won't pass an inspection required by the bank.  It's up to you to find out what the problem is.  

WiLD 'splained it betterer.  

docwyte said:

 

jgrewe said:

I'm going to come at this from a different angle.  It could mean that the seller doesn't want to offer any kind of financing. 

 

 

I don't understand this, it's not like the seller is doing the financing.  When a bank gives the buyer a mortgage the seller gets a check at the time of closing.  So they receive full payment (minus any loan amount they have) at the time of sale. 

The no financing thing can't be coming from the seller, it has to be bank driven, which means there's something seriously amiss about this property.

The average house sale goes that way. Bank gives a mortgage, seller gets check at closing.

Some deals get more complicated and the only limits are how creative the two parties want to get.  I bought a commercial property off a guy that was just retiring from the business.  He had depreciated the property down to zero and everything he got from the sale was taxable at a pretty high rate.  We came up with a way that he got a good chunk of money at closing and he held a mortgage for the difference at 8%(pretty good rate back then).  I had two mortgages, one for the large amount from a bank and a smaller one from the seller for what was about 20% of the sale price.  I got into the building for 10% down, fixed some things up and raised rents. I refinanced it a few years later and paid off the seller's second mortgage.

Normally if the seller knows  about, and doesn't want, those kinds of deals it is listed as "Seller financing not available"

Now I'm really invested in this deal the OP brought to us over the internet.  I'm hoping we get a report back from the OP on what the seller meant.

Is it possible that the house is for sale but not the land it is sitting on?

I think jgrewe hit it.  It just means the seller doesn't want to finance the sale.  See it all the time.

I sense too many black helicopters flying over a lot of folk's homes.  

Sellers nor their listing agents go out and ask banks if they will finance the sale, that is for the buyer to do.  It's just saying the seller doesn't want to finance the deal.

Still, always do due diligence.

They could have tried to sell it before and had a problem getting the banks to finance it , 

So the seller does not want to waste time with a new buyer trying to get bank financing  since they are pretty sure it will not work , 

if you are thinking of making a bid , pay the title company to  check it out and see if there are any liens the seller  is not telling you about......

In reply to spitfirebill :

The only way I'd buy a property with no inspection and for cash would if my prime contractor for renovations is a demolition contractor. Knock it down and haul it away.