So you’ve found the perfect house and the price is great–but you’ve come to a fork in the road: an inspection reveals that the house has a bad roof.
As someone who very recently was looking at a lot of fixer upper houses–the bad roof is something that I’ve become intimately knowledgeable about.
Let’s dive into what to do went you come across this problem during your home search.
What types are roofs are there and what are the lifespans
The first thing you need to know is that all roofs are not created equal. Depending on the material and the style of roof, they can have drastically different lifespans.
The “composite shingle” roof is the lowest quality roof on the market (outside of “rolled” roofs, but if you see one of those just run away).
A composite shingle roof has a lifespan of around 20 years and is the cheapest to put on a house (which is why they are a popular choice).
Architectural or 3-D / “3 tab” roofs (all the same but different names) are a step up from the lowly composite shingle roof. These type of roofs can last up to 30 years and generally have a better aesthetic appearance than the composite roof.
You can tell a 3-D shingle apart from the composite by the depth / dimension of their appearance. Once you’ve seen a few of each style, you’ll start to be able to tell the two apart.
The challenges of buying a house with a bad roof
A “bad” roof can be many things. It can either be a still functioning, but old roof, or it can be a roof that is already leaking.
There are two main challenges with buying a house that has a bad roof. The first challenge is that the roof may already be leaking, and if it is, it’s causing damage “downstream.”
The first problem will start in the ceiling and in the attic. Sheetrock will get damaged and stained, insulation will get wet, electrical wires may be exposed to water, and anything in the attic will get ruined.
If the problem still isn’t addressed, it will end up draining down through the walls and eventually through the light fixtures–ruing a lot of what it touches along the way.
If the roof you’re thinking about “inheriting” is already shown to be leaking, that means there is likely damage that neither you nor the inspector can see before it’s too late.
You’ll need to factor in the possibility of damage to inner walls and other areas of the house if there is shown to be a leak.
If you plan on getting a mortgage to buy the house, you’ll need to keep in mind that you’ll be required to purchase homeowners insurance to protect the investment.
Homeowner’s insurance companies may not cover the house if the roof is too old and is deemed in “poor” condition by an inspector.
Here is a rough idea of the what some homeowner’s insurance companies consider the “cutoff” dates for older roofs:
Composite Shingle = 15 Years
Architectural Shingle = 20-25 years
Metal Roof = Over 30 years
You’ll want to check with a local insurance agent that can get you quotes from many different providers so you know your options with the roof age.
Even a roof in good condition can be old enough to be a problem for some companies–and if you can’t get the insurance then you won’t get the mortgage.
What does it cost to replace a roof
The cost to replace the roof varies dramatically based on what type of roof you want to put on, where you live, how you plan on dealing with the old roof, how many layers of shingles are on the old roof, and if any of the components of the roof underneath the shingles needs to be replaced.
In a standard roof replacement, what’s really being replaced is the singles on the roof–that’s the cheapest form of roof swapping.
If anything underneath the shingles like the roof sheathing, plywood, struts etc. needs to be replaced along with the shingles, you are looking at a significantly more expensive job and may want to reconsider the deal.
The cheapest roof on a smaller house that just needs a shingle replacement could be around $4,000. The largest the house, the higher the cost. The cost also goes up depending on the severity of the slope of the roof (the steeper the slope, the more expensive it will be).
The best thing to do is consult with a local contractor in your area, or ask your agent to help you get an idea of the cost.
Buying Options When the Roof is Bad
All is not lost of the house you are buying is found to have a bad roof.
There are two rehab loan products that you can apply for that will loan you the funds necessary to make the repair on the roof and roll the cost into the total loan amount.
The FHA 203K and the Fannie Mae Homestyle Renovation loan are the two products that are available to help you in this situation.
You’ll want to check with a lending professional to make sure you qualify for those products. The FHA loan requires at least a 3.5% down payment, while the Fannie Mae product requires a 5% down payment minimum.
Some lenders will also let the seller fund a repair escrow, which is a fund that is set aside at closing that is used to make repairs on the roof.
Sometimes a seller is simply willing to make the repair on the roof to keep the deal in tact.
In either case, you’ll need to check in with your lender to see what your options are with dealing with the repair on the roof, and double check with the home insurance agent to make sure they are willing to sign off on any plan you come up with.
Your agent is your greatest resource when things like this come up, so use them and ask for help!
Why it might be worthwhile to go forward with the deal
You now have massive leverage in the deal. You can use that to your advantage if you have the money to fix the roof and the seller does not. The seller is going to have a brutal time selling the house, as many lenders and home insurance companies won’t touch a house with a bad roof.
If you’re coming to the table with cash, or you can afford to fix the repair during the closing / escrow process, you can use your leverage to ask for a huge discount on the house.
Let’s say the roof repair is going to set you back $5K. There’s no reason you can’t try to get a 10-15K discount, because the potential buyer pool just shrunk dramatically for the seller and you should get a discount for that and the risk you are taking on buying the house.
The bad roof can be an advantage for you to get the house of your dreams for a discount if you 1) have the money and 2) press your advantage.
When you should walk away from the bad roof deal
If you’re depending on using a loan product that won’t allow big repair escrows, or has strict standards for the condition of the house (like a VA / FHA loan) then you may want to pass on the deal.
It could also be wise to pass on the deal if the seller is being unreasonable about their price or is in denial about the roof.
If there is a leak in the roof already, you may want to use that as your red line in the sand and walk. Remember, leaks in roofs mean everything under that roof is now exposed to the elements, and water can devastate a house in no time.
Devastation = money. Don’t let the seller’s headaches becomes yours if there is a leak.
Buying a house with a bad roof isn’t the end of the world, but it can be tricky to figure out. A roof is a critical item for the structural integrity of a house, which means that every stakeholder in the transaction will have a say in what they need to sign off on the deal.