Roof Issues Discovered - Can I ask for Credit Instead Price Reduction?

[Nir]

Hi,

Flat Roof issues were identified following a home inspection and before waiving conditions.

Can I ask for credit of say $5-10K instead of adjusting price? It`s better and perhaps makes sense(?) as repair money comes out of pocket not mortgage.

Thanks.

 

[Mike Milovick]

Absolutely. But ask yourself, what was my expectation going in regarding the roof? In the seller disclosure, did he say the roof was new? Or was it deemed to be halfway through its economic life?

There is nothing more irritating, than listing a property with a visibly old roof - and then having buyer/seller negotiate a price - and then have buyer re-negotiate based on conditions he can plainly see - or his realtor should have pointed out.

Admittedly, a flat roof`s condition usually can not be visible from the ground. If roof is $10K replacement, and your expectation was it was halfway through its life - but it is in fact shot - ask for half...$5K...as a resonable, win-win compromise.

Just my thoughts. Today you are a buyer. Tomorrow you are a seller.

Mike

QUOTE (investmart @ Oct 8 2009, 07:35 PM) Hi,

Flat Roof issues were identified following a home inspection and before waiving conditions.

Can I ask for credit of say $5-10K instead of adjusting price? It`s better and perhaps makes sense(?) as repair money comes out of pocket not mortgage.

Thanks.

 

[RedlineBrett]

QUOTE (investmart @ Oct 8 2009, 05:35 PM) Hi,

Flat Roof issues were identified following a home inspection and before waiving conditions.

Can I ask for credit of say $5-10K instead of adjusting price? It`s better and perhaps makes sense(?) as repair money comes out of pocket not mortgage.

Thanks.

Your lender may have a problem with it as they generally don`t like cash back deals.

If you are going to be owning it for a while what about asking the seller to pay half of a new roof. Then, after a quote from a contractor you are happy with you INCREASE the price by half the cost and term the contract for the roof job to be done before possession.

You then have a new roof paid for with mortgage money - the cheapest money available.

 

[Nir]

Thank you Mike and Brett for the great input.

 

[Nir]

QUOTE (MikeMilovick @ Oct 8 2009, 04:46 PM) with a visibly old roof

How can a flat roof be visible.. unless it`s a bunker?
joking, you and Brett actually provided great advice! I will keep you updated..
Regarding the roof: it is new information the agent tried to hide only identified during inspection.
There are many other issues but as you mentioned most I will not use to re-negotiate as I was
already aware of them. One of the most difficult psychological challenge I have investing is the
90% of agents being such liars. I`m sure many here unfortunately have the same experience.
philosophically, I guess one can understand and even accept their behavior by calling it survival.

Thanks & Regards,
Neil

 

[bizaro86]

QUOTE (investmart @ Oct 10 2009, 02:30 PM) One of the most difficult psychological challenge I have investing is the
90% of agents being such liars.

I`m not sure thats really a fair statement, and I am most definitely NOT a realtor. I consider my realtor an extremely honest person, which is one of the qualities I considered critical. Even speaking in general, while most realtors will present a rosy view in a listing, that seems fair to me, since they have a fiduciary duty to get the best deal for their client. Now where the line between optimistism and "liar" gets drawn is a tough one, but I don`t think its unreasonable for real estate investors to realize that "cozy" == SMALL!

Obviously if you were told the roof was in great shape and its terrible, someone told a lie, but it could just as easily be the client who lied to the Realtor, who then passed along information they believed to be true.

Anyway, I`m not trying to minimize your situation, but generalities about a whole group aren`t always helpful.

Michael

 

[Thomas Beyer]

QUOTE (investmart @ Oct 8 2009, 04:35 PM) Hi,

Flat Roof issues were identified following a home inspection and before waiving conditions.

Can I ask for credit of say $5-10K instead of adjusting price? It`s better and perhaps makes sense(?) as repair money comes out of pocket not mortgage.

Thanks.
5K for a new roof ? more like 20K !!

credit or cash .. what is the difference ? banks usually lend on the NET sales price only !!

 

[Nir]

QUOTE (thomasbeyer2000 @ Oct 15 2009, 05:53 PM) 5K for a new roof ? more like 20K !!

credit or cash .. what is the difference ? banks usually lend on the NET sales price only !!

Hi Thomas, pls keep in mind that it is not reasonable to expect a new roof. do all the properties you buy come with a new roof? of course not. what is fair is to ask the owner to pay 50%. so you get a roof that`s "half" new. your "20K !!" estimate translates to a 40K roof! it’s just a 4-plex hence 10k is closer to reality than 40k. cheers.

 

[jwilbrin]

QUOTE (investmart @ Oct 16 2009, 08:47 PM) Hi Thomas, pls keep in mind that it is not reasonable to expect a new roof. do all the properties you buy come with a new roof? of course not. what is fair is to ask the owner to pay 50%. so you get a roof that`s "half" new. your "20K !!" estimate translates to a 40K roof! it`s just a 4-plex hence 10k is closer to reality than 40k. cheers.

Investmart, it would be wise to heed Thomas` advice. Yes, a roof on a 4 plex could quickly escalate to over 35K depending on the size of the roof area and condition. Flat roofs are extremely expensive to replace if there are certain issues such as improper drainage. Recently my neighbors had to have the flat roof on their 2600 sq. ft. bungalow replaced due to the fact that water was not draining properly from the roof. They had just replaced the roof a few years ago but were still experiencing problems. Once they got a reputable roofing company in that specialized in flat roofs it was discovered that there was not sufficient drainage and slope to the roof, yes, slope to a flat roof. With our Alberta chinooks, the snow was melting and pooling on the roof, then refreezing. By mid winter there was an ice sheet on their roof of almost 6" deep which became a heavy load on the structure causing drywall to crack etc. By the time the entire roof was redone the costs had escalated to almost 40K. And yes, once they found out what the problem was they did go out to get as many quotes as possible. But due to the scope of work that needed to be done, all quotes came in at $35K plus. My advice would be to definitely get a reputable flat roof specialist to come in and assess the roof before proceeding.

With regards to what is fair to ask for, Heck, ask for full replacement value. Every property we`ve ever purchased we have always asked for full replacement cost for everything that needs replacing. And guess what? In roughly 95% of our transactions we`ve gotten what we`ve asked for. We have done many many transactions since 1997, mostly multi family. You never know what you will get unless you ask. Never be afraid to ask for what you want... you`d be amazed at what sellers will give up. What`s the worst thing that will happen? They say no and counter.

 

[Thomas Beyer]

QUOTE (jwilbrin @ Oct 17 2009, 01:08 PM) ...

With regards to what is fair to ask for, Heck, ask for full replacement value. ... You never know what you will get unless you ask. Never be afraid to ask for what you want... you`d be amazed at what sellers will give up. What`s the worst thing that will happen? They say no and counter.
indeed .. same here & good advice !!!

 

[Nir]

Thanks Jwilbrin and Thomas. It reminds me of a lesson taught by Thomas: you get what you negotiate not what you deserve. hope I used the right wording..and that it`s included in the book(?) hence me mentioning the word fair is somewhat wrong business-wise.