So after weeks or even months of work, you finally find a home that matches most of your criteria, location and price but the home inspector informs you that it needs a new roof. What do you do? Is it a deal killer or could it be an opportunity?
Well, at first you may balk at having such a large expense but if everything else checks out, purchasing a home that needs a new roof is not necessarily a bad thing. Especially considering however you handle it, in the end you may be buying a home with a new roof and that’s definitely a good thing!
Home buyers have more power than they may realize when it comes to negotiating a homes price that needs a new roof. Insurance companies typically won’t issue a policy on an old roof that is at, or past, it’s expected lifespan, even if it seems to be in decent shape so sellers are more motivated to make the deal.
Basically you have 3 choices in this situation:
Get The Seller To Pay For It
Getting the seller to pay for the roof while keeping the selling price the same is probably the best solution for the buyer as it will ensure everything goes smoothly with little additional effort. Of course this varies from house to house, but if the seller is willing it’s a great way to get it out of the way quickly.
Split The Cost
Some sellers may not have the money or desire to pay for the repairs in full without increasing the price in some fashion, so another popular option is splitting the costs. The buyer can pay for their part in the form of cash at closing or discount off the price. Usually done at a 50/50 percentage (Although other percentages favoring one side or the other aren’t uncommon), this can benefit both parties by taking care of the problem at less than the full cost.
Pay For It Yourself
Depending on the home and seller, you may find yourself loving everything about the house and the cost of a new roof would still be worth it, even if you pay for the whole thing yourself. For whatever reason, the seller won’t cover any of the cost’s of replacement, but you want the home badly, your only choice is to pay for it yourself. Either with cash at closing or adding the cost to the price of the home. Raising the price is risky though as not enough and you’ll pay more out of pocket and too much can put you upside down on the loan.
If adding to the price of the home is too risky for you, you always have the option of a renovation loan which will finance the home plus the costs of replacing the roof. For example, if you buy a $250,000 home and the roof is $10,000, the loan will be for $260,000. After closing the roof is immediately replaced with the bank paying the roof contractor directly. This option allows you to purchase insurance (as even a home with a bad roof will be covered if a renovation loan is made) prior to closing knowing it will be fixed immediately, making the process easier as well as quicker.