What is the Point of Disclosing an Old Roof or Anything Else?

By
Real Estate Agent with RE/MAX Plus

Ok, ok, I am struggling here! 8 hours sleep in the past 2 nights doesn't leave too many brain cells left for blogging. And today is my second day, so I have to get this in.

Well, I have noticed recenlty that roofs are back in style again. Along with air conditioners. My last 3 transactions have gone like this:

1) My buyer, submitted an offer on a moderately priced home (under $65,000) just over 10% UNDER list price. The seller accepted the offer. Disclosure: roof age is unknown, roof is very obviously old, will need a new roof. We discussed it when we looked at the house and submitted the offer. Home inspector says, the roof is old will need to be replaced - yes we know. The buyer now wants another $2000 off the contract price. Seller says no way. The buyer is actually OK, they like the house, they'll go forward. But the friends keep saying, but it needs a new roof - doesn't the seller know it needs a new roof? Yes, and so did the buyer and the seller doesn't have to lower her price again just because the buyer wants her to.

2) My listing. Disclosure - roof is 1 layer, roof is old, obvious to the naked eye it needs to be re-roofed or replaced. We are priced to reflect roof and some other items. Buyer comes in a little under list price which is under $130,000 and asks for everything not nailed down (ok, I exagerate a bit here) but, all the appliances and some personal property - seller says OK.  Home inspection comes along - buyer wants $7500 credit for the roof. I know how much a roof can change in 3 days but, come on! Seller says no - buyer walks.

3) My listing, written in the MLS and on the disclosure - the A/C does not work. The seller will not repair. Home inspection results - the buyer wants the A/C evaluated by an HVAC person! Seller declines and we site the disclosure. The buyer says OK. They negotiated on price because of the roof, which the seller diclosed been repaired - and amazingly, did not mention it again - thank you very much!

What is the point of the disclosure provided to, and signed by the buyer prior to the accepted offer if they are only going to come along after the inspection and ask for money for the disclosed item!!

Maybe we need to do a better job of explaining what the purpose of a property condition disclosure is for so when the buyer reads it they know why they are reading it and if the pimples are already reflected in the listing price or if they need to be addressed right at the time of - heaven forbid - the actual purchase offer itself!

Comments (34)

Susan Lehmkuhl
Buy and Sell Smart Realty, LLC - Phoenix, AZ
Associate Broker

I was in a CE class the other day and the broker teaching said he requires all sellers to have an inspection prior to listing the house!  Not going to stop buyer's from asking for the moon and/or lowballing but it does get everything out on the table prior to negotiations.

Sep 03, 2010 03:18 AM
Richard Iarossi
Coldwell Banker Residential Brokerage - Crofton, MD
Crofton MD Real Estate, Annapolis MD Real Estate

Angela,

What makes even less sense when they back out is that they've already spent a couple of hundred dollars for the inspection. Especially when it deals with something they already know from the disclosure.

Rich

Sep 03, 2010 03:19 AM
Janet English
RE/MAX By The Bay, Daphne Alabama - Daphne, AL
Market expert in Daphne, Spanish Fort, Fairhope

Angela,

I'm in hurricane country and what we find here is during this phase of negotiation and home inspection, the buyers will start investigating insurance quotes. Many of our insurers will give a discount if the roof is less than 5 years old. In fact, some houses will only qualify for "regular" insurance if the roof is new or newer. Otherwise, they may have to use what's called the "beach pool" insurance that's significantly higher. So a non-issue suddenly becomes an issue.

 

Sep 03, 2010 03:47 AM
Angela Penkin
RE/MAX Plus - Rochester, NY

Things are a bit crazy right now. That is for sure. Thanks for all of the great comments.

I do believe however that buyers have to take some responsiblity for their actions and be Hear, speak, see no eavil photoaccountable - unless they bought with their ears, eyes and mouth covered they should know SOMETHING about the condition of the house. I also think as agents, often times we don't want to address this prior to the offer - is it because we are so concerned about losing the buyer, we don't want to make waves?

Yes - how crazy is it to spend $400 to have the inspector tell you the roof is bad - that you already know is bad, so you then have a reason to try to renegotiate the price. They either figure the seller is going to roll over, open a vein or they'll walk away. Boy, that can get expensive for a buyer. And an inspection prior to the listing can be helpful, but the buyer could still want their own. I had a sale in 2008 that went belly up - buyer couldn't get financed. The agent had sent me the whole report - I gave the report to the new buyer to review (I work for the seller don't forget) and he still had his own inspection and they asked for things the first inspector didn't site.

How about this idea? The buyer has to inspect prior to the offer being negotiated. After all, then they would know for sure if they need to make an adjustment to price for the roof, air, or whatever.  BTW, not pointing fingers at the inspectors here - talking about things that are obvious to the eye that something is significantly less than perfect.

Sep 03, 2010 03:54 AM
Chris and Berna Sloan
Group 1 Real Estate - Tooele, UT
Tooele UT

Great comments, but let's not let ourselves completely off the hook here. As buyers agents, it's our job to educate and advise. Especially on a disclosed item, we have no business advising our clients to comtinue to push when we should already know when the price has been "adjusted". And if we don't know the price has been adjusted, it just tells me that we didn't do our job prior to the offer! Doing things the right way won't stop the occasional goofy buyer from asking for the stars after getting the moon, but....Thanks for the post!

Sep 03, 2010 04:23 AM
T Doe
Arctic Bay, YN

Hello Angela...Great blog,

Some people are smarter than they appear, and we should believe they will know what looks bad. Sorry you and all agents have to bout it out with sellers and buyer in the, like one earlier comment said, 'let's make a deal'. As an Inspector, I will evaluate and recommend future actions with the houses' components.  I have seen things that are in really bad conditions, mostly due to wear and age.  If the roof has not shown signs of water intrusion, I will not tell you the roof needs replacing now, no-matter how bad it looks, but I will recommend that it will need replacing in the near future. Some roof and major components can survive well beyond the recommend life expectancy, so many factors can play into how long.  When it's integrity fails then you will have the leaking, that you don't want and perhaps that would be your legitimate cause for the client to have the roof replaced.

 

 

"Take care of your home and your home will take care of you"

Sep 03, 2010 04:33 AM
Angela Penkin
RE/MAX Plus - Rochester, NY

Chris I agree completely - just like we tell sellers things they don't want to hear, we have to tell the buyers too. Why is it we seem more reluctant to do that? Is it because they have the money?

If I have the oppotunity to have a good first meeting with a buyer - easy when they are a referral - I explain it is my job to get them the house they want - and if that means explaining they may have to pay full price or more (if it's an awesome house, great buy, whatever - guess what, they won't be the only ones that want it) and being able to support the advice I provide, that's what I do. But I also explain it's my job to sometimes explain why a certain house may not be a good choice. In the end, it's up to them.

But yu are right - we have to have these conversations. If we have not done that then all they have to go by is what they hear in the media, or from their friend, or their brother's girlfriend's father who used to sell real estate. LOL!

Sep 03, 2010 04:34 AM
Karen Kruschka
RE/MAX Executives - Woodbridge, VA
- "My Experience Isn't Expensive - It's PRICELESS"

Angela  It is a sign of the times - people make offers, counter offers, ridiculous demands in their effort to "get a deal"  Fortunately, people who do not need to sell are also too sophisticated to fall into the trap

Sep 03, 2010 04:41 AM
Vicki Lloyd
The Lloyd Realty Group - San Diego, CA
(619)452-9798, Real Estate San Diego California

When my sellers have accepted a "rock-bottom-line-no-more-room-for-negotiations" point, I recommend putting on the counter offer : "Home sold as-in with no additional repairs or concessions by seller."

The buyer may then conduct his inspection and decide to go forward or quit now.  (No other choices!)

Sep 03, 2010 05:24 AM
Angela Penkin
RE/MAX Plus - Rochester, NY

Vicki - I like that! What kind of response do you get? Anyone else out there in the rain using something like this?

My other favorite thing is when the buyer signs a waiver for no inspection - and then the attorney adds it back in when he make his approval. Often times, I am sure, at the instruction of their client hoping to make an end run around the seller. Happened last year on a $300+ listing of mine. We had a second offer come in for full price and no sale contingency right at the same time of the attorney letter - so - my seller's attorney only had to disprove the first contract because of the change - we didn't have to bump.

The first buyer's attorney called the selling agent and said you know I would never do that, the boyfriend insisted I add it in!

Sep 03, 2010 05:34 AM
Mark Hitz
Keller Williams - The Colony, TX

Angela ~

In North Texas the Roof Condition is a Big Issue for Insurability.  If the buyer is financing, the home has to be insurable.  If the roof isn't insurable, then the seller either fixes the roof or gets a cash buyer.

You can't close and fund a loan if there isn't insurance.

Because of the ongoing Roof Hail Claims, insurance companies want to insure a home with a roof that has 5 or more years of life left.   Most people get their roof replaced due to an insurance claim.  No, I take that back - last summer I watched the windstorms come thru my neighborhood and literally peel the shingles off like frisbees landing in yards. 

My home isn't insured by St. Farm - It's "State Farm LLoyds" because of all the roof claims.  

So the sellers disclosure says "age of roof approx 9 yrs".  To the buyer that means nothing - are they 15, 20, 30 year rated shingles? I am a Realtor, not a roofer.   Get the house under contract and get an inspection and then if needed get a roofer inspection.  Get a CLUE report and see when it had a roof claim and if it was PAID did they actually get a new roof installed or pocket the insurance check.

The Texas contract is pretty clear.  Buyer accepts the home in current condition and has XX number of days to termiate for ANY reason.  During this termination option time you get the inspection done and if needed renegotate the contract a 2nd time with an executed contract amendment stating specific repairs and/or price reduction.  If you don't come to an agreement by the end or the termination option period either the buyer terminates or lives with the contract.

My advice is to get to know 2 reputable area roofers and utilize their advice accordingly.

Sep 03, 2010 05:34 AM
Scott Fogleman
New Home Team 804-573-9592 - Richmond, VA
Greater Good Group

Angela,

Sometimes people in this price range fight over the most minute things...And buyers /sellers "firends" can be the worst influence.

Sep 03, 2010 05:34 AM
Clint Mckie
Desert Sun Home, commercial Inspections - Carlsbad, NM
Desert Sun Home, Comm. Inspection 1-575-706-5586

As an Inspector I have to ask, why wasn't the roof replaced before the listing or while it was on the market? This would have eliminated all the bickering back and forth. The inspector did his job by calling out the roof. Did you tell the potential buyer that the price of the home was being offered with a discount for the new roof? I think this would have gone a long way in putting the buyers mind at ease. From the buyers view point, I shouldn't have to deal with getting a new roof installed, after all I am spending a lot on the house already. Just another view point. 

Sep 03, 2010 06:00 AM
Margaret Goss
Baird & Warner Real Estate - Winnetka, IL
Chicago's North Shore & Winnetka Real Estate

I've seen the same thing with foreclosures being sold "As Is."  Buyers seem to disregard that as well.

Sep 03, 2010 06:33 AM
Carl Pruitt
FHA Loan Advice - Buford, GA
http://FHALoanAdvice.com

Definitely sounds like a buyer and seller education issue. Both sides need to be told much of what has been said in these comments PRIOR to writing a purchase offer. When I was an agent way back in ancient days, I always made sure my sellers understood that they should get rid of their emotionalism about the house and regard it as a pure business negotiation. No need to get personally insulted by the offer/counter off process.

Sep 03, 2010 06:45 AM
Donna Harris
Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com - Austin, TX
Realtor,Mediator,Ombudsman,Property Tax Arbitrator

I'm surprised that if the roofs are this bad, how are the buyers getting financing? I would think the roofs would need to be replaced/repaired prior to closing... at least in my market.

Sep 03, 2010 08:47 AM
Andrea Swiedler
Berkshire Hathaway HomeServices New England Properties - New Milford, CT
Realtor, Southern Litchfield County CT

Angela, this really is one of my pet peeves. I price things according to condition, etc. But then this happens. Like it was a big huge surprise, NOT. It's like after the inspections some huge monster is awakened inside of some people.... go figure!

Sep 03, 2010 09:34 AM
Andrea Curtis United Country Premier Properties Certified Military Relocation Professional
United CountryPremier Properties - Harker Heights, TX
U C INTERNATIONAL DIRECTOR OF MILITARY PROPERTIES

Angela, great post.  I really do think a lot of buyer's are drinking the "everyone is on the brink of foreclosure" kool-aid and therefore I can renegotiate as many times as I want.  I just went though one very similar to that we finally closed in August and that is because I ponied up a portion of my commission since we were 4 days from closing.  By the way my buyer did not get a housewarming gift!   Especially since he didn't thank me for the money I lost and he was the one that was changing everything every 5 minutes.   The seller on the other hand was very gracious.  To answer any questions on this YES I went over with the buyer EVERY time how much the seller dropped the price, already repaired, oh yes is paying a portion of your closing costs...this buyer was just greedy.  The reason I ponied up some commission was the buyer said we don't care if we lose the money for inspections (they had 2) , earnest money, appraisal etc you can always find us another house...can we say NO WAY!  I didn't even put my usual sold by sign in the yard.  I didn't want to really see them again.   Sorry I got on a rant the would is still raw LOL

Sep 03, 2010 09:43 AM
Bryan Robertson
Los Altos, CA

I think comment #1 sums it up very well.  Buyers are convinced that they can ask for anything and sellers will be so desperate that they'll sell.  However, I think it goes to the seller to say "No".  If enough sellers push back or can get multiple offers, the demands placed by buyers will diminish.

My personal belief is that a disclosure and as-is addendum in an offer means the buyer will take it without askign the buyer to make any improvements.  If would be great if we could get a lawsuit in the sellers favor indicating that buyers who accept at home as-is in the offer and with sufficient disclosure (inspections are essential) that they be locked into the sale.  It's too easy for buyers to simply change their mind.  The end result is that sellers lose value because the listing is then tainted (i.e. people ask why the buyer backed out - they think something it wrong.

Sep 03, 2010 09:50 AM
Kathy Kenney
Keller Williams, Princeton, NJ - Robbinsville, NJ
Realtor - Princeton & Central NJ Homes for Sale

And then there was a time when the Sellers would not and did not have to do a thing and the Buyers were overbidding and outbidding competitors!  Oh, what an interesting field we are in!

Sep 03, 2010 03:10 PM