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Dear FWer,

We are in the process of selling our house. We accepted an offer a couple weeks ago. The contract was signed, and the buyer had the house inspected. We fixed all the problems requested by the buyer after the inspection. The other day the appraiser came to appraise the house, and said we needed a roof certificate among other things that we gladly complied. We had our roofer to issue a certificate stating that roof was in operational condition, but may need replacement in one to two years, which is an honest opinion, since the roof is about 15-20 years old. The underwriter of the VA loan that the buyer was using later said that VA loan needs a certificate that roof is good for at least two years. We asked whether they can accept a third-party opinion, and were told no. The only thing the lender would accept right now is the replacement of a new roof. No new roof, no certificate, and no mortgage. The buyer would not want to chip in, and we don't feel like to put on a new roof all by our own.

My question is:
1. Does the VA loan lender have a ground to require a new roof? Is there really a two-year requirement for the roof?
2. Can the buyer get their earnest deposit back? It looks like they failed to secure the loan.

Thanks for all your opinion in advance.

HG

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If you are going to have the roof replaced, save money and don't bother stripping the old shingles. That is unless there... (more)

BondGamer (Apr. 19, 2012 @ 10:43a) |

Tell the buyers that you will replace the roof with one that will pass code, but it will be bright pink singles since th... (more)

daw4888 (Apr. 19, 2012 @ 10:53a) |

I believe with the VA, they keep those records on file so if you got another buyer or if they went with a different lend... (more)

henry33 (Apr. 20, 2012 @ 1:17a) |

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Some advance knowledge and the right people involved and you may have been okay. VA and FHA have more strict requirements, in general. I dont blame you for not wanting to spend money on roof... it would have changed your negotiations. Your talking about the eminent failure of one of the homes systems. I think you need to find a new buyer, possibly strictly conventional loan, at this point.

Not sure, but I would think that it is up to the buyer to find financing not you. Unless they put a loan condition into the contingencies I am not sure they can back out and may have to go a different route for financing.

If contingencies are all removed- their problem
If not- then you may be looking for new buyers

mikef07 said:   Not sure, but I would think that it is up to the buyer to find financing not you. Unless they put a loan condition into the contingencies I am not sure they can back out and may have to go a different route for financing.

If contingencies are all removed- their problem
If not- then you may be looking for new buyers


Normally obtaining financing is a contingency in itself.

Yup, generally the financing contingency doesn't have an expiration date. It's expected for the buyer to use good faith in attempting to get a loan.

This looks like a classic case of the buyer genuinely being unable to secure a loan, being able to walking (having to walk), and getting their earnest money back.

I don't know why you'd try to put the screws to the buyers, they haven't done anything wrong. Their out the home inspection, possibly the appraisal, and perhaps other fees.

daw4888 said:   mikef07 said:   Not sure, but I would think that it is up to the buyer to find financing not you. Unless they put a loan condition into the contingencies I am not sure they can back out and may have to go a different route for financing.

If contingencies are all removed- their problem
If not- then you may be looking for new buyers


Normally obtaining financing is a contingency in itself.

Last I knew VA and FHA had the 2 yr req. Read your contract-the buyer will probably get to walk w their earnest here thx to a financing contingency if you don't resolve this. But like Vegas said, they're out $$ and you're both out time. How bad do you need to close sooner rather than later?

That being said, is it you don't want to pay upfront or don't want to fix it, period? We've had this issue come up a couple times and the repairs were just paid out at closing, or it went into an escrow, because, frankly, we knew the damn repairs, a septic and roof, needed to be done. It was time. The thing is, you can let them walk and hope for a cash or conventional buyer who'll offer close to the same, but that doesn't mean that buyer won't want the roof addressed or give you a crap offer to reflect the condition of your roof. So you still might be faced w the cost or a price drop, and you'll be starting over again. Then again, another buyer might be cool w the roof. So. Eh. Up to you.

That being said, given our exps, and I only speak for my husband and I, had I a house to sell that had rotting wood or a bum septic or roof or pests, etc, I probably wouldn't be leaning towards someone w a VA or FHA offer. Not again. *sigh*

Wont the seller have to disclose the issue with the roof being recommended for replacement in less than 2 years to any other buyer that might come alone?

Thanks everyone.

We don't want to screw the buyer. Both he and we are out of time and money. We have given plenty closing help, but so far he is not willing to negotiate at all. It is just very frustrating that the whole deal hinges on the roof.

Is it true that we have to disclose the roof might need replacement? The roof is working, nothing wrong with it, just old.

HG

daw4888 said:   Wont the seller have to disclose the issue with the roof being recommended for replacement in less than 2 years to any other buyer that might come alone?
why?

solarUS said:   daw4888 said:   Wont the seller have to disclose the issue with the roof being recommended for replacement in less than 2 years to any other buyer that might come alone?
why?


As far as I know, by law, you must disclose ANY knowledge or information you have on the house.

solarUS said:   daw4888 said:   Wont the seller have to disclose the issue with the roof being recommended for replacement in less than 2 years to any other buyer that might come alone?
why?


Sellers have to disclose what they know, so if they don't disclose the roof issue next time, and the roof fails within 1 year, it could be painful.
However, if this buyer walks, OP could get another roof inspector to come in and re-asses the roof. Someone else may think the roof will be good for more than 2 years since roof inspections are subjective

Did the current roof inspection only say "needs to be replaced"? or did it offer some sort of a loophole that says 'if you fix XYZ (plug holes, replace some shingles, change a drain spout, etc) then the roof may last longer than two years?' If there's one bad spot in the roof, it's possible to replace/fix that for pretty cheap, and it's possible that could extend the life of the existing roof.

Here is the quote from the roof inspection:

The roof appears to have been installed approximately 16 to 18 years ago. It is expected that the roof will need to be replaced in the next 1 to 2 years.

Do we have to disclose this?

Thanks.

HG

humangenomics said:   Here is the quote from the roof inspection:

The roof appears to have been installed approximately 16 to 18 years ago. It is expected that the roof will need to be replaced in the next 1 to 2 years.

Do we have to disclose this?

Thanks.

HG

One more question - what kind of roof is it? Wood framed with shingles? Depending on the maintenance of the roof, the life could be as long as 40 years, so 15-20 isn't necessarily an issue unless it has been poorly maintained.

You would have to disclose that to a future buyer unless you can get a new report to supersede it. you could try some small maintenance, and get it re-inspected. See if the new inspector would consider the current report and improvements, and issue a statement saying:

"The roof appears to have been installed approximately 16 to 18 years ago. Due to improvements made since the inspection on [insert date of current inspection here], it is expected that the roof will need to be replaced in the next 2-4 years."

Roofs are finicky. If it really needs to be replaced in the next 2 years, there's not much you can do, but it should be obvious just by looking at it that it needs replacement. If it's not obvious, I bet there's some stuff that could be done.

I think if the roof is bad immediately they yes however since it has life then I don't think you have to disclose it. Re-roofing changes the whole offer and maybe buyer pool. If the buyers think you should cover it I would maybe walk or tell them they need to find another financier that will underwrite the loan. Contingent on financing can sometimes be specific to a rate and not conditions so the burden of them finding another finance may be on them and they may be out earnest money if they don't want to fix it on their dime or accept a higher purchase price.

humangenomics said:   Here is the quote from the roof inspection:

The roof appears to have been installed approximately 16 to 18 years ago. It is expected that the roof will need to be replaced in the next 1 to 2 years.

Do we have to disclose this?

Thanks.

HG


Was this something their inspection did not reveal? The more I think about it, the more I think that this would be easily identified during an inspection (if properly done). You should disclose the date when the roof was installed, but stating when it needs to be replaced would be simply an opinion, not a fact.

I'd check your contract. On a recent FHA purchase (and a contract on a different property prior to that one), there was a clause that stated if repairs required by FHA exceeded $500, the cost would be added to the purchase price. (This was in GA.) It's at least worth checking.

This depends on your state, but generally even in strict states you only have to disclose defects. If something is working fine, but is just getting to the end of its useful life (roof, water heater, whatever) you generally do not have to disclose it.

It sounds like the inspector did not find a defect in the roof. He just observed that the roof is old and that based on an average lifespan it will need replacement within a few years. But this is something your buyer will find out for themselves when they have a home inspection, so whether or not you disclose it probably makes little difference.

DamnoIT said:   Contingent on financing can sometimes be specific to a rate and not conditions so the burden of them finding another finance may be on them and they may be out earnest money if they don't want to fix it on their dime or accept a higher purchase price.

Depends on your state, but in ours we only have to list known defects and age. Being old is not a defect. Failing and leaking is a defect. You just list the age and that's it. But that's our state. (And doesn't mean a buyer won't try and come back after an inspection points it out and negotiate a replacement, but, eh. Your asking price should be factoring this in anyway, imo.) Anyway, OP would have to check their contract. Typically, ours have said contingent on securing VA/ FHA/ blah blah financing. If it's in there, and they can't get a VA cause of the roof they could walk w the earnest, ime.

humangenomics said:   Here is the quote from the roof inspection:

The roof appears to have been installed approximately 16 to 18 years ago. It is expected that the roof will need to be replaced in the next 1 to 2 years.



Maybe the roofer is just trying to drum up business.

DamnoIT said:   Re-roofing changes the whole offer and maybe buyer pool.

I'll agree with this. I doubt you were selling it as being in perfect condition and probably not as a fixer-upper, but somewhere in between. Every used house has items that you either live with or fix once you have it. The price somone is willing to pay should take those inperfections into account. If they want a perfect house, the asking price will be higher because of the renovatons.

Can you get a roof replacement paid for by your insurance for hail damage? That's commonly done in Colorado.

My condolences. The same thing happened to me. I sold my house in 2007 to buyer with FHA loan. Buyer justified that his offer was 10K lower than asking price because roof was old, but could wait to replace it later. The FHA appraiser required the roof be replaced as condition of the loan. Buyer told me to replace it at my cost. I said no way since you got a 10K discount for the old roof. Even offered to split the cost, but the buyer walked. Ultimately, it took almost another year to sell the house. This is after me paying to replace the roof. I even ended up getting less than the original offer, so I would have been better off to just bought the roof to begin with.

I bought my current house using VA and inspector noted that the water heater was "dated." VA required it to be replaced. The inspector I paid to go through the place after the VA inspector checked it out and said it was fine, other than there were a couple tiny rust spots the size of a pencil eraser. VA inspectors are pretty notorious for being very nitpicky.

For what it's worth... sometimes with big transactions, I benefit more by just getting it done rather than prolonging everything, especially when there are major events involved like moving, buying/selling homes, etc.

IDK what percentage this is of the home's value, but I would be tempted to just pay it and move on in life.

A new roof increases the curb appeal and the value. Your choice depends on your market trend.

There is nothing that says you can't go with the cheapest roofer that you can find....

The underwriter required work be done by a licensed roofer, which is not cheap. Thanks.

humangenomics said:   The underwriter required work be done by a licensed roofer, which is not cheap. Thanks.

But that doesn't mean you can't use the cheapest licensed roofer with the bottom of the barrel materials...

Why don't you just increase the purchase for the cost of the roof and fix it once all contingencies have been removed?

Move on and have your realtor remove FHA and VA as options from listing. Govt programs tend to think that people aren't capable of taking care of themselves or their business, and is often the case. Also are you unpatriotic, the VET deserves a new roof

lotusgardener said:   Why don't you just increase the purchase for the cost of the roof and fix it once all contingencies have been removed? OP would be lucky to get 50% return on cost of new roof. Better off selling to someone else, conventional. Of course all depends on OPs situation for urgency of move. That < 2 yrs is just an opinion, beyond the fact that minor repairs may extend the life a couple more years.

If you are going to have the roof replaced, save money and don't bother stripping the old shingles. That is unless there are already 2 or more layers on there (it is a code violation in many areas to have too many layers). You will cut the cost by about 1/3.

Tell the buyers that you will replace the roof with one that will pass code, but it will be bright pink singles since they are on sale. Tell them if they are willing to pay for half that you will let them pick the shingle color.

I believe with the VA, they keep those records on file so if you got another buyer or if they went with a different lender, it would still be out there in their system. Sounds like they didn't get a commitment letter which stops them from backing out. So at this point, they could get their earnest money back. They're usually just required to apply for one loan and be rejected.

Actually go overs aren't even that expensive if you shop around. Around here there's even people on craigslist that say they'll do a go over for $200 a square (100 square feet) including shingles and labor. I do wonder a little at the quality though. An average home that someone would buy using a VA loan is probably in the 12-16 square range.

While it's nice that you don't want to screw the buyer, put it back in his court, he's the one who selected the VA loan. Tell him you won't fix the roof and see if he'll walk. If he walks, do a go over and put the house back on the market or just tell people no VA loans.



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