Interesting situation...my first thought is to just see what the FHA appraiser comes back with as far as needed repairs. Since you already accept the fact you may have to repair the roof in the relatively near future, you may get lucky and he/she says nothing. If it is a requirement of the FHA appraisal, it won't go away, i.e., FHA will know it is there even if another party tries to buy with FHA.
If it does come back with the roof repairs as a condition, the Sellers would then have considerable motivation to help you get it fixed.
As to the deductible, only their policy would tell us that, but I do believe almost all insurance policies have a deductible or the premiums would be sky-high, so your idea of offering to pay it may help. Remember, though, if the deal falls through you are out that money.
My advise is to try to relax until you know you have an issue.
Bill Parker, Loan Officer
AZ Lic# 09011570
CPA--Licensed, no longer practicing
Legacy Group Lending, Inc.
15333 N. Pima Road, Suite 300
Scottsdale, AZ 85260
(O) 480-993-3080; (M) 602-565-3646; (F) 480-993-3081
MISSION STATEMENT: To create an unbelievably enjoyable experience for my clients, while guiding them through the most important financial transactions of their personal lives. My clients know me as their Mortgage Lender for Life. I truly appreciate your referrals.
If you think it's expensive to hire a professional to do the job, wait until you hire an amateur.
Red Adair, Oil well firefighter
In regards to the insurance claim, that is probably a good advise. You or your REALTOR should probably do some more probing to understand why the current owners do not want to file the claim. There might be an underlying reason besides the fact that they feel the roof is old. See below some ideas on how to address their concerns:
1 - they might be concerned that if they file a claim, their rate will go up in the future. The AZ hail storm was classified as a disaster. And as such, claims should not impact owners who filed them. They will have an impact on the overall market - meaning insurance costs for everybody increased.
2 - they might be concerned with the amount of work required. Once they file the claim - and actually any repair company will get the paperwork ready on their behalf. There is very little they have to do.
And most roof repair companies are offering to pay you up to $1,000 (which should cover the deductible) if you let them put a sign on your yard advertising their services. It is a clever way of offering roof repair where the owner does not have any out-of-pocket expense.
And even if the FHA appraiser does require the roof repair, don't forget that you could try getting a FHA 203K, which is an FHA loan where they escrow funds for repairs. It will likely add time to process, but it may be an option.
And I will leave you with one last thought. Kudos for you for not being emotional about the roof issue. Many people involved in real estate transactions get overly emotional and end up ruining a good deal. If you did your analysis and feel that the house is still a good deal even considering the roof situation, you will probably be fine.
PS: would you let us know if the FHA appraiser does ask for the roof repair? Just curious.
Jose Dias, REALTOR
Realty One Scottsdale
When FHA does the appraisal and they have a problem with the roof and they feel it needs to be replaced it will need to be replaced in order for you to get the loan. If you cannot get financing through FHA you will not be able to purchase the home without the home meeting the FHA requirements.
The Bank is probably selling the home AS IS but you still had the option of having the inspections done and you can still ask to have things repaired. That of course does not mean they will repair them.
Do not pay the homeowners deductible to get the roof replaced. Also be careful about the roof issue as the homeowner may request the roof be replaced and the insurance company pays the Bank the amount for the roof repair and the roof never gets fixed.
You should talk to a real estate attorney regarding this matter so you don't lose your earnest money and the home you want to purchase. If you are using a Realtor you should have them give you names of Real Estate Attorneys that can help you in this situation.
If you are not working with a Realtor and you need additional information I can give you some attorneys names that you can talk to.
Sun Canyon Realty
Carlos J. RamÃrez, PC, ABR, CNE
Associate Broker/Realtor, HomeSmart â€“
Certified Negotiation Expert (CNE)
I (listing agent) had a similar situation that I closed in October, 2010 in Mesa. The buyer was getting FHA. It was a short sale and had roof damage estimated at $1,700 and also had active termite estimated at $ 500.
What I did went back to the seller's lender (If you don't ask, you get nothing but you ask there will be some returns) explained the current situation, " Buyer is getting FHA. FHA guide line requires to repair roof damage and treat the termite...etc. If I lose this buyer, I DON'T HAVE ANY BACKUPS!". They asked me to get a couple of estimates. I got extra $ 5,000 for seller's incentive except entire closing cost.
Then I wrote up an addendum that stated "if the buyer cancel this contract, the buyer will be responsible for the entire amount of $1,700 + $ 500". I had the buyer chose contractors for repair/place roof and treat termite and also had them pay the contractors through escrow. Then the seller gave the buyer the same amount credit through escrow. In this case the buyer really wanted that property.
I would recommand just wait until how FHA appraisal comes out. I don't think they would ask for replacing the roof for aging. If they do, then go back to the seller's lender to see what they say . If they aren't helping, then go with 203K.
Karen McDonald, GRI