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I am hoping that all of you home-savvy folks out there can help me in my latest dilemma trying to close on my house.....
Quick go around:
The home I am buying is an REO. Seller makes no offer to help w/ repairs. Inspector finds active roof leak that needs to be fixed. I have a roofer scheduled to come out the first week after I take possession of the home.
Here is my problem: All of the homeowner's insurance companies are requiring that I fix the roof PRIOR to closing in order to be insured. I have to have proof of my home being insured at closing. I do not feel comfortable shelling out $7500 of my own money for a new roof before I take possession of the house. There is a clause in my REO contract that states that the bank that owns the home can pull out of the contract for any reason and at any time, up until the date of closing, with only my deposit coming back to me.
God forbid this happens, I am not only out appraiser fee and inspector fee, but then I can kiss my $7500 savings goodbye as well. Any advice? I was thinking maybe drawing up an additional contract stating they'd owe me the roof money if they withdrew?....but my agent is giving me the impression that this bank wants to close as clean as possible, without any bumps in the road.
Any help is greatly appreciated as I am now growing a bald spot from pulling out all my hair.......
I am hoping that all of you home-savvy folks out there can help me in my latest dilemma trying to close on my house.....
Quick go around:
The home I am buying is an REO. Seller makes no offer to help w/ repairs. Inspector finds active roof leak that needs to be fixed. I have a roofer scheduled to come out the first week after I take possession of the home.
Here is my problem: All of the homeowner's insurance companies are requiring that I fix the roof PRIOR to closing in order to be insured. I have to have proof of my home being insured at closing. I do not feel comfortable shelling out $7500 of my own money for a new roof before I take possession of the house. There is a clause in my REO contract that states that the bank that owns the home can pull out of the contract for any reason and at any time, up until the date of closing, with only my deposit coming back to me.
God forbid this happens, I am not only out appraiser fee and inspector fee, but then I can kiss my $7500 savings goodbye as well. Any advice? I was thinking maybe drawing up an additional contract stating they'd owe me the roof money if they withdrew?....but my agent is giving me the impression that this bank wants to close as clean as possible, without any bumps in the road.
Any help is greatly appreciated as I am now growing a bald spot from pulling out all my hair.......
Have a roofer come out and patch the leak, but not replace the whole roof. Explain that you will have them fix the whole roof after the closing...they may do the pre-repair work for free. Might work if the leak is different than needing all new shingles.
Last edited by tambre; 07-25-2008 at 08:03 AM..
Reason: need to clarify
....to repair the roof alone would cost $3500. If you mean just go up there and put some tar on it, that's been done twice before (prior to me making an offer on the house) with the leak still coming through.....but I might try it. That's a good idea. Then have the inspector go back and give it a thumbs up.
Here, we've dealt with this situation by having the amount of the roof repair estimate held in escrow by the title company, to be released to the roofer when the work was completed and the receipt presented to the title company (or to you when you present the "paid" receipt). Now, this was the lender, not the insurance company, requiring the repairs, and I've never done it with an insurance company required repair, but it might be something to look into.
Okay, just brainstroming here-
Could you just let the mortgage company insure it for now? They usually can cover properties, and seems like I heard it might cost a little more than normal. They set it up in escrow too.
Y'all know what I am talking about? Letting the mortgage co. insure vs. the owner getting insurance?
Maybe there is a name for it....
You could change it to whoever you want later. at least you could get thru clsoing and in the house.
I'm a retired insurance agent and I can tell you that the insurance company will not issue a certificate of insurance unless the roof is fixed to their satisfaction. The insurance company is not about to insure property that has a known liability that could put them on the hook for a known claim in the near future.
The bank is stuck with a property that it can only sell to a cash buyer willing to take the risk of not having insurance until the roof is fixed. In someways you are in a position of strength. Tell the bank to fix the roof prior to closing. Since your willing to pay for the roof repair write up an addendum to the contract stating that you will pay for the new roof up to $7500 at closing. This may delay the closing so be sure to extend the closinig date in the addendum
When we bought our place some 12 years ago, the roof definitely needed to be replaced. At the same time, Sun City was under construction and finding a roofer at all, never mind a good one, proved challenging. We did, indeed, manage to close (with insurance) on the condition that the roof be replaced as soon as practical after closing. That was before I was an agent, and I don't quite remember how we worked that - it may be because we have Germania (Texas only) and they're, as an agent for another company said when he called thinking he could get us another deal, "a different breed of cat". Sort of like the credit union of the insurance industry.
It may be possible to escrow the money and satisfy the insurance company. If that doesn't work you might could get it patched prior to but you not have many options. These are the challenges of REO's. Your agent may have some other ideas.
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for a new roof before I take possession of the house. There is a clause in my REO contract that states that the bank that owns the home can pull out of the contract for any reason and at any time, up until the date of closing, with only my deposit coming back to me. 
