Throwback Thursday: When Is a Roof Allowance a Price Reduction?

By
Education & Training with Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals.



"The cost of inaction is far greater than the cost of fixing a problem."

-Carol Williams


When I peruse  through my ActiveRain blog archives, certain posts seem to catch my eye.  That is the case with the following post.

In November of 2007, several months after a big wind storm in Wenatchee I posted the following article. 


Wednesday I was asking another agent about the motivation level of his sellers and whether they are flexible on their price.  The house would well suit my buyer's needs but it seemed over-priced. 

So, I'm asking this agent if his sellers are flexible on price.  His answer:  "Well, they are offering a $9,000 roof allowance so that's nearly a $10,000 price reduction".  WHAT?  I was speechless.  Since when is a roof allowance a price reduction?  

Isn't that like a car dealer telling you they're going to include a steering wheel so that's like a $300 price reduction?  Uh... what would I want with a car without a steering wheel.  Likewise, what would I want with a house without a good roof?  Unless you're making an all-cash, "as-is", sale you cannot sell a house with a bad roof.  In my experience, lenders will request the appraiser to estimate the roof life at about 5 years or more.
 
You cannot price a home at market value and consider it a price reduction by putting on a new roof!   

A roof allowance does reduce the seller's net proceeds but it is NOT a price reduction... is it?

So... when is a roof allowance a price reduction?  In my opinion: NEVER. 

Posted by



"The best way to predict the future is to create it!"
- Peter Drucker

"Information is FREE. Knowledge, Experience & Integrity Are Priceless."

-Carol Williams

Retired: Real Estate Broker/Owner, Property Manager 
Coaching, goal setting and marketing consultant by appt.

Active: Golf & Travel Blogger
"Golf isn't a sport. It's a lifestyle."
SeniorWomenGolfers.com
TopTeamCarol@gmail.com


 

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Real Estate Sales and Marketing
Groups:
Bananatude
Crap-Tacular
Old Farts Club
Tags:
price reductions
roof allowance

Spam prevention
Show All Comments
Rainmaker
3,858,990
Dorie Dillard CRS GRI ABR
Coldwell Banker United Realtors® ~ 512.750.6899 - Austin, TX
Serving Buyers & Sellers in NW Austin Real Estate

Good morning Carol Williams .

Wow..this doesn't make any sense. A buyer can't get insurance on a the home with out the roof replaced. They might get insurance but no insurance on the roof..what lender is going to accept that?

Mar 15, 2018 05:01 AM #3
Rainmaker
3,368,246
Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Good morning Carol. Many sellers have a funny way of doing the math. Enjoy your day!

Mar 15, 2018 05:37 AM #4
Rainmaker
1,369,281
Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Property Manager

Good morning James Dray ,
I cringe for the seller, getting that kind of advice. 

Mar 15, 2018 07:33 AM #5
Rainmaker
1,369,281
Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Property Manager

Good morning Nina Hollander ,
Exactly!!!  The agent is doing the seller a huge disservice if that is their  attitude toward maintenance.

Mar 15, 2018 07:35 AM #6
Rainmaker
1,369,281
Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Property Manager

Hi Dorie Dillard ,
The deal would never get financed without a decent roof, would it? 

Mar 15, 2018 07:36 AM #7
Rainmaker
1,369,281
Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Property Manager

Good morning Wayne Martin ,
I was getting the impression, in this case, the agent was the one giving bad advice. 

Mar 15, 2018 07:37 AM #8
Rainmaker
1,027,000
Susan Haughton
Long and Foster REALTORS (703) 470-4545 - Alexandria, VA
Susan & Mindy Team...Honesty. Integrity. Results.

I just love sellers that think routine maintenance items are improvements.  /sarcasm off. 

Mar 15, 2018 09:06 AM #9
Ambassador
2,913,033
Anna Banana Kruchten CRB, CRS
Phoenix Property Shoppe - Phoenix, AZ
602-380-4886

Hi Carol - absolutely NOT a price reduction.  Lenders I work with require a 2 year roof certification for roof and unless it's a cash deal the seller will need to replace the roof. What buyer would consider a bad roof in need of total replacement a 'price reduction'. That's just crazy thinking.

 

                                                   Featured in BananaTude

 

Mar 15, 2018 09:39 AM #10
Rainmaker
1,369,281
Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Property Manager

Hi Susan Haughton ,
In this case, I think  the agent and seller were both drinking that kool-aid. 

Mar 15, 2018 09:49 AM #11
Rainmaker
2,602,162
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

I agree with you Carol.  Value is based on current market data.  That value takes in property condition as a component.

Mar 15, 2018 10:42 AM #12
Rainmaker
2,602,162
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

CONGRATULATIONS Carol, on having this blog FEATURED in the Old Farts Club group!    

Mar 15, 2018 10:44 AM #13
Rainmaker
1,369,281
Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Property Manager

Thank you so much for the Feature! Myrl Jeffcoat !

Mar 15, 2018 10:45 AM #14
Rainmaker
1,511,999
Beth Atalay
Cam Realty and Property Management - Clermont, FL
Cam Realty of Clermont FL

Hi Carol Williams, with a roof that's about to cave in, buyers can't even get financing. I hope the agent didn't advice the seller of this huge misconception. 

Mar 15, 2018 10:57 AM #15
Rainmaker
4,575,833
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Carol,

Oh, my goodness!  This person has a math deficiency!  How does one get a long with a glaring issue like this?  A

Mar 15, 2018 02:25 PM #16
Ambassador
3,113,723
Paul S. Henderson, REALTOR®, CRS
RE/MAX Northwest. - Tacoma, WA
Tacoma Washington Agent/Broker & Market Authority!

I got a 5 year cert on my roof on my house when I sold it and the buyer wanted the roof replaced or a 10 year cert. Very few  companies give a 10 year cert and my roof was a 50 year roof with less than 20 years use.

Mar 15, 2018 11:03 PM #17
Rainmaker
1,369,281
Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Property Manager

HI Beth Atalay ,
It seemed like both the agent and seller were drinking bad kook-aid.

Mar 16, 2018 07:22 AM #18
Rainmaker
1,369,281
Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Property Manager

Hi Ron and Alexandra Seigel ,
I wish I would have followed the outcome for that listing.  We just moved on.

Mar 16, 2018 07:24 AM #19
Rainmaker
1,369,281
Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Property Manager

Good morning Paul S. Henderson, REALTOR®,CRS,
Your experience sounds very typical.  5 years is pretty standard in my experience.  That's the minimum the banks seem to require so that's what the roof inspectors give.

Mar 16, 2018 07:27 AM #20
Rainmaker
1,994,523
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Hi Carol - that seller really needed to get real.  It needs to be replaced first.

Mar 16, 2018 09:04 AM #21
Rainmaker
5,123,127
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
Marketing Agent for The Todaro Team

Hi Carol Williams that's a roof that has one year left before it starts leaking, if it wasn't already!!!  such an odd way to think and what's even worse, to communicate to another agent!!!!

Mar 16, 2018 09:26 AM #22
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
1,369,281

Carol Williams

Retired Agent / Broker / Property Manager
Ask Me a Question
*
*
*
*
Spam prevention

Additional Information