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We're under contract to purchase a home and just had our home inspection done.
The inspector says the home needs a new roof right away. There are two pretty small leaks, the asphalt shingles are losing granuales, shingles are unattached and open to wind damage, and there is evidence of impact damage. (probably from a large tree limb). The roof is 15 years old and we are in Central Florida.
I am going to get an official estimate on Monday for full replacement. We do have one phone estimate for $6,000.
My question is how is this normally handled? Would we ask the seller to pay for the entire thing? Would we split the cost 50/50? Would we just reduce the purchase price by $6,000?
I know the seller really needs to sell this home and they are in financial trouble. (the house is empty now) I have no idea if they even have the means to pay some or all of the roof.
I'm also unsure if I can even bind homeowner's insurance with a roof that needs immediate replacement, and of course our lender wants to know the name of our carrier pretty soon. You would think insurance companies these days would send someone out to take at least a quick look at the property before they write a policy.
So what would be my best course of action at this point? We don't want to cancel the contract (and we are well within our inspection period, no worries about running out of time). The seller really needs to sell and we really want to buy, but we want a fair deal.
We should get the appraisal data by Wednesday, and I'm also wondering if the appraiser will bring up the situation with the roof. You can tell it's in bad shape just by simple observation, so I would think an appraiser would notice this kind of thing if he is looking.
I also don't want the seller to find her own fly by night roofer and slap something on there for a cut rate price that is going to fall apart on us in 10 years or less.
Any advice from someone who has been there, and done that? We offered a good price and we did not ask for any closing costs.
Also, what about a "credit" for part of the cost? How does that work when you are getting a mortgage? As I understand it, there might be a limit to that amount and of course, the lender would have concerns if the roof is a wreck.
I'm not super confident in our agent's skills here, and I should also add that the market here is a seller's market. Only about 3 months of inventory. We've been looking for months and have to be out of our rental house on Oct. 31. (or sign another 1 year lease, which we don't want to do) Buying this house will save us hundreds per month over what any rental will cost in this market.
Last edited by MovedfromFL; 09-29-2012 at 04:11 PM..
This is where your Real Estate agent earns their money through negotiation skills. The agent will write a BNSR (Buyer Notice of Seller Repairs Request) asking the seller to pay for the new roof, and the negotiation begins.
I think if it were us, unless I was super in love with the house and willing to take the 3k hit, I would ahve the seller replace the roof or walk. After the roof was replaced I would also want a third party come inspect it to make sure it was done properly and a quality job.
There are a lot of houses on the market so don't get tunnel vision that this is the only house you can purchase.
When I request roof replacements for buyers I write in "buyer and seller to mutually agree on contractor" that way, we can try and ensure they don't use the worst company in town.
If it is that bad, it is likely the appraiser will call it out on the appraisal. Starting to see that with conventional loans in my area so, I'd get cracking on negotiations. Why kind of loan are you doing?
I think if it were us, unless I was super in love with the house and willing to take the 3k hit, I would ahve the seller replace the roof or walk. After the roof was replaced I would also want a third party come inspect it to make sure it was done properly and a quality job.
There are a lot of houses on the market so don't get tunnel vision that this is the only house you can purchase.
I would want to choose my own quality roofer -- what if the "third party" comes in and says the job wasn't done properly, then they have to get into another dispute? Can the Buyer get several estimates and ask for a credit at closing? There is so much variation in the quality of construction, especially in Florida with the "fly-by-nighters", as the OP mentioned.
I agree, I never let my sellers do repair work, but that opens another bag of worms.
I feel that all inspections should be before the offer, but since things don't work that way, I prefer that my buyers make as is offers. That is they make an offer, then if agreed inspect. If they find the home or parts of it unacceptable, then go back to the basics with a lower price. Sellers don't necessarily like it, but it resolves lots and lots of issues and typically everybody wins.
I would want to choose my own quality roofer...
There is so much variation in the quality of construction
^^This. Replacing a disposer or fixing a light switch is one thing but when you get into doing MAJOR work
like a roof or HVAC I'll go even farther and say that the only concession I'd want from the seller is on price.
(I'd rather do the work myself)
If a buyer is uncomfortable buying a house that will need a new HVAC system or roof or similar major
work or has financing issues then they should look for a house that already has that work done and is ready
to go BEFORE they're invited in to see it and make an offer.
In this vein... I'd leave the re-roof job to the seller (who certainly knew it was needed but didn't want to spend the money before they had a buyer on the hook) with the message "call me when it's done and we'll look then".
NEVER sign a deal to buy anything at any price unless you see it in the condition that price warrants beforehand
We're using a conventional loan. I also expect the appraiser to call it out, unless he is just flat out lazy or incompetent.
If we just reduce the purchase price, then we (a) reduce both agent commissions (hence I'm sure they will recommend against this option, and (b) we may not be able to bind homeowner's insurance unless a new roof is in place. The lender will probably want to know why the contract price changed as well.
So let's say we agree to split the cost $3,000 for each side. I think we will almost certainly need to have the new roof on *before* closing for insurance/ loan reasons. I don't want to spend any money on the roof before I close on the house, for obvious reasons.
If we wait until after closing, am I keeping a secret from the lender and the insurance company if they fail to find this out on their own? I was going to get a quote from the carrier that the seller currently uses, but if they find out about the roof, they could cancel the existing policy for the seller.
Also, how would a credit back at closing work? Would my lender even go for that? Would they ask what it was for?
We're using a conventional loan. I also expect the appraiser to call it out, unless he is just flat out lazy or incompetent.
If we just reduce the purchase price, then we (a) reduce both agent commissions (hence I'm sure they will recommend against this option, and (b) we may not be able to bind homeowner's insurance unless a new roof is in place. The lender will probably want to know why the contract price changed as well.
So let's say we agree to split the cost $3,000 for each side. I think we will almost certainly need to have the new roof on *before* closing for insurance/ loan reasons. I don't want to spend any money on the roof before I close on the house, for obvious reasons.
If we wait until after closing, am I keeping a secret from the lender and the insurance company if they fail to find this out on their own? I was going to get a quote from the carrier that the seller currently uses, but if they find out about the roof, they could cancel the existing policy for the seller.
Also, how would a credit back at closing work? Would my lender even go for that? Would they ask what it was for?
Don't be concerned about reduced commission with reducing purchase price. It won't make that much of a difference anyhow.
I also expect the appraiser to call it out, unless he is just flat out lazy or incompetent.
I think we will almost certainly need to have the new roof on *before* closing for insurance/ loan reasons.
If it's this bad.. then tell the seller to fix it like they should have 5-10 years ago.
Really... zero compromise here.
"Call us back after the work is done" and keep looking.
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