auntciss

Buyers may be backing out...

auntciss
June 11, 2008

I'm coming off the sidelines to post to seek opinions and advice.

We listed our house three weeks ago, had four showings, then received an offer. They buyers are a young couple who saw the house once and then came back a second time with their parents and an uncle. We were asking $449k, they bid $420, and we settled on $430. Part of our accepting that offer was our realtor made clear upfront that our home needs a new roof, which they said they understood. The roof is two layers, so it was up to them to tear it off and start over (which I would do) or add a third layer (legal here) for a reduced price, but with a shorter shelf life. The roof is in good condition, with no leaks, but it is 20 years old and so has about reached its full life.

The couple had the inspection last Wednesday, and our realtor told us everything was fine, that there was nothing that was going to break the deal. Then yesterday, he called me to say the buyers believe the roof is going to be a $15k-$20k job, not a $10k job to to tear off and replace, as we had said. We have written estimates for a total roof replacement for $10k, when we thought we might do it ourselves. Furthermore, the buyer sent his agent an email, which she forwarded to our realtor, who in turn forwarded it to me, insisiting there are three layers of roof on our house, and his inspection report says so, that no sellers trying to sell their home are going to be able to dispute that, and he's going to make a new, reduced offer on the house. Our realtor asked if he could see the inspection report, and the buyer said he paid for it, so no.

I don't know what to say. Our roof most definitely has two layers, not three, and my husband thinks their inspector may have erred, looking at our roof from the ground (the first layer is shingle and not plywood, so it may look like three). We've already had roofing contractors here ourselves to give estimates, all in the range of $10k. I said to our realtor as far as I know no one has come by to look at the house and give this buyer a real estimate (I work from home), and in any case I would imagine a good roofer would want to come inside the house to inspect it from the interior. I told him the buyers were welcome to bring contractors into the house this week if they wanted to get estimates, and not just drive-by estimations.

This buyer finished his email saying they still really love the home and want to work something out with us. If they did, wouldn't they have roofing contractors come to the house? My realtor thinks they have cold feet and are using the roof as an out, and has told them we've been honest about the condition of the roof from the start, that's already been reflected in the offer we accepted, and they need to make a decision. Basically he's prepping us to put our house back on the market. I pulled the estimates we have for the roof and told him we'd be glad to share those with the buyers as well, even though I imagine they'd want to get their own. Our Realtor told us he doesn't think that's going to help any. And he doesn't seem worried about our getting another offer. I do hate that we've lost some time.

I'd hate for this deal to fall apart over a misunderstanding, but maybe our Realtor is right, and they just have cold feet and want an out.

What do you think? I'd like to know not only for my curiosity but if we run into this again with another set of buyers. We really don't have the $ to do the roof ourselves. We haven't found another house to buy yet so we're not under the gun to unload this house, but of course it would've been nice to make the deal! Ah well...

Thanks in advance for your thoughts on this situation.

Comments (24)

  • terezosa / terriks

    At this point could you increase the price by $10K and put on the roof yourself?

  • auntciss

    Do you mean go back to this couple with a new counter of sorts, say we'll accept $440K and we'll do the roof ourselves?

    I'm assuming we could finance a roof month to month somehow.

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  • clg7067

    "I'm assuming we could finance a roof month to month somehow. "

    I just had my roof done. I received a bill in the mail. It was due in 30 days, and afterwards there was a 1% per month charge. Maybe you should talk to the roofing company.

  • terezosa / terriks

    Since you have a purchase contract on the house, there are some companies that will agree to be paid at closing.

  • auntciss

    Clg, I don't mean to make light of your expense. If we had the money right now to do the roof we would do it, too. That was more of a question on my part: Is there another way to finance a roof? Maybe Home Depot has such plans, I don't know but I'll be calling around to find out. And I would appreciate help from anyone else here who's BTDT.

  • reno_fan

    Just amend the contract to give the buyers a roofing credit at closing (with one of your companies that gave you the estimate.)

    That way the buyers get to pick the color, and all is taken care of after closing.

    It's done here all the time.

    Sometimes the buyers want the roof done prior to close rather than wait until after, but either way, roofs done at or near closing happen all the time. The one caveat is that you still have to pay for the roof if the contract falls apart.

  • auntciss

    Thanks for the replies. I'm going to need this info for the next buyers! Unfortunately this deal bit the dust.

    Our realtor still hasn't heard back from the buyers, although he made clear we need a decision on whether they want to bring in roofing contactors, move forward, etc. So he went to their attorney, whom he knows, and asked if he knew what was going on and the attorney said they're just not going to go through with the contract, and no one's really sure why.

    Next time, though, we'd probably do better to *try* to stick closer to our asking price (which is aggressive), THEN give a roof credit to the buyers. (Thanks, renofan!) The strategy of accepting their low offer with the thought that it would reflect the roof expenses they'd incur didn't work out. They were either going to try to get more $ out of us or they're just skittish for some undisclosed reason and walking away. I wish they would've told us because now I feel very jerked around.

    Thanks again.

  • sienna_98

    Won't you be betting the earnest money? Unless they can prove that you misrepresented the condition/repair cost of the roof, I would think you would be entitle to the money.

  • theroselvr

    Just amend the contract to give the buyers a roofing credit at closing (with one of your companies that gave you the estimate.)

    That way the buyers get to pick the color, and all is taken care of after closing.

    It's done here all the time.

    Sometimes the buyers want the roof done prior to close rather than wait until after, but either way, roofs done at or near closing happen all the time. The one caveat is that you still have to pay for the roof if the contract falls apart.

    We had something like this arranged for our "service pit" issues. When we finally got a few contractors in we picked the one that was the most expensive but would do the best job after my hubby did research on how it should be done. 2 contractors said one way, this other said something different. Anyway, so we get him to write us a letter saying a concrete wall was fine (it was amateurishly put up by the last owner), gave him a $300 deposit for him to come and do the work after we move, then would give the buyers credit for the balance due.

    Late Friday we get the call saying the buyers don't like the contractor we gave the deposit to & now they want the full credit for the work, meaning we'd eat the deposit. By the time closing rolled around we weren't sure if we were closing or not, thankfully we did.

    It can be a risk if things don't work out at closing..

    Our realtor still hasn't heard back from the buyers, although he made clear we need a decision on whether they want to bring in roofing contactors, move forward, etc. So he went to their attorney, whom he knows, and asked if he knew what was going on and the attorney said they're just not going to go through with the contract, and no one's really sure why.

    Did you get it in writing? If not, what I would do is to get the estimates together and fax them to your agent, then have him fax to their agent. Also put it in writing about letting roofers come to give an estimate. In hindsight, we'd wanted the buyers to come look at the service pit but they never did and they went back & forth about what they wanted. After 5 weeks of that we were so stressed. Take care of everything now.

    If you have it in writing that the deal is dead move on and do so quickly so that your house doesn't lose value. Are people still looking at houses in your area?

    If the deal does fall through and the estimate is older, get your roofer to come back out and give an updated one, also call 2 others, then put it in your file so that your agent has it in writing.

    Next time, though, we'd probably do better to *try* to stick closer to our asking price (which is aggressive), THEN give a roof credit to the buyers. (Thanks, renofan!) The strategy of accepting their low offer with the thought that it would reflect the roof expenses they'd incur didn't work out. They were either going to try to get more $ out of us or they're just skittish for some undisclosed reason and walking away. I wish they would've told us because now I feel very jerked around.

    Good luck sticking to what you want. This is a lousy market to sell in, the offer we got was $15k lower on a $220k house. Can I ask where you're located?

  • auntciss

    We have one of the roofers who gave us an estimate come back tomorrow with a new, updated estimate, and we'll make a copy and give it to our agent.

    Roselvr, I hear you. We asked $10k below the lowest comp, then came to an offer $19k below that. All we can do next time around is be prepared, and getting the updated estimates is one way to do it. We were always up front about the roof and the cost and in the end these folks used the roof as a reason to slip out of the deal, so I think our agent's right: They just got cold feet, and not much we could do at this point to change their minds. So moving onward. We'd like to sell, but at least we don't have to.

    Thanks again for your replies.

  • bdpeck-charlotte

    I don't think it was said yet, but don't rely on any verbal understandings. This buyer was able to walk because the roof was on the inspection report, even though they knew the condition when they made the offer. Make sure to stick to a higher price (so you can credit back as you said) or counter any lower offer with the roof being as is, while the rest of the house is subject to the normal inspection clause.

    Sometimes buyers use the inspection report to walk their cold feet out the door. Our house was 2yr and 2 mo old, and they walked on us. We agreed to fix everything on the report, but they just didn't want the house.

  • mariend

    The only suggestion I have is get everything in writing, set time limits and continue to show the house, with a sale pending statement. If you need a new roof, maybe an allowance towards the new roof? Another thing, prices have just about tripled on roofs. We put on a steel roof less that a year ago and that same roof cost 3 times more today. Insurance paid for most of it due to the fact it was less than 10 years old and had major hail damage, but no leakage. The house we sold was 15 years old, but the roofing inspector certified the roof for another 5 or 10 years because it was so well built with no leakage. He certified and guaranteed it and it is all in writing.

  • lyfia

    Could you get a home equity line of credit to use for replacing the roof and then pay it off when the house sells? Not sure if the lending industry will do this when it is for sale.

  • auntciss

    Marie, Where do you live that roofing costs have tripled in a year? That's awful and I wonder how common it is. Ours went up too, but not nearly as much. We got two updated estimates: one for $11k and the other for $10k, up from $9k three years ago. Good idea about setting time limits.

    Bdpeck, I agree. In the end these buyers just didn't want the house.

    Lyfia, I'll explore the home equity loan route, though I do like the credit idea best, so long as buyers won't be scared off by doing a roof. If they are maybe we'll go off the market and replace the roof, before coming back on. We only have a three-month listing anyway and can expire the listing at any time.

    Thanks to everyone for the replies.

  • lyfia

    auntciss - mariend is talking about a metal roof. Steel prices are rising every week. How do I know - we are getting quotes for putting up a metal building on our property and our quotes are only valid for 7days whereas in the past they had a much longer time span.

  • sparksals

    If they were using the inspection report to get out of the contract, I think they are obligated to show the report to the seller. I would never believe someone's word over an inspection issue.

    Sorry your deal fell through. I think your realtor erred on this when he didn't put the roof issue in writing on the contract that they knew the price reflected the cost the buyer would incur to replace the roof.

  • auntciss

    Lyfia, ah, that explains it. We're only doing asphalt shingle here, not metal, so that explains why our prices haven't gone up much.

    Sparksals, I'm a total newbie to selling a house. We're in NY. The buyers signed a binder, which I understand holds no real water legally. They had an inspection, then we were to go to contract. I need to talk to our lawyer on Monday about what went wrong. He did say in his message if we get another offer to call him immediately--after this experience he doesn't have to tell me twice! Of course even if the roof were in writing in a contract at this stage, if the buyers wanted out I wonder how much can you really do or get in terms of recourse. If buyers want out how can you really ever stop them? Thankfully we only lost two weeks but now we're a three-week old listing vs. a brand-new listing. I also worry we now appear "tainted" that we had a deal fall through. It's frustrating since we feel we've been so honest about the roof and very fair in our pricing.

    I wrote a polite email to the buyer directly to ask if the roof was really the only reason he had decided not to go forward with the contract. I probably should not have, and I didn't exactly expect a response, but couldn't help myself from asking without the game of telephone through agents. He never responded. I do wonder how this ended so badly. It seemed hostile when he told our agent he wouldn't share his inspection report because he himself had paid for it, yet said he was going to make a lower offer based on his report. How could we even consider to accept that without privy to the inspection report? Now my husband and I are worried are there other things wrong with the house. Our realtor was at the inspection and he keeps reassuring us there really isn't, that these buyers are using a roof they knew about to get out of the deal.

    Anyone else feel like a buyer walking is like a breakup when you don't really know why your boyfriend dumped you, except well, you do know: they just don't want you! I know: Get over it. Moving on! We're priced well, show well, and just have to give it another shot with other lookers for now.

    Thanks again. I've got cleaning to do for the weekend. I'm sure I'm not alone! ;)

  • theroselvr

    The way the inspection report was done for our house was that the inspector wrote the buyer a letter. There was a summery of the house (age, type, location) then he listed a few things, the flue on the new furnace, concrete blocks in the crawl, kitchen sink not being the right trap, electric outlet not ground right. At the end it said a detailed inspection report would follow to the buyer. The buyer sent a letter to my agent saying they wanted numbers such & such to be considered for repair. There really wasn't a lot on our report, I don't doubt our buyer knew they were getting a decent house.

    Thankfully we only lost two weeks but now we're a three-week old listing vs. a brand-new listing. I also worry we now appear "tainted" that we had a deal fall through. It's frustrating since we feel we've been so honest about the roof and very fair in our pricing.

    I don't think I'd worry about being "tainted". It's a weird market, people are backing out all of the time. Look at the news, real estate is not looking good. Buyers get scared.

    You're very lucky to have gotten an offer so quick. We were on for 9 months, then a 60 day close which I would never recommend. If you do get a contract, insist on a 30 day close if you can.

    I wrote a polite email to the buyer directly to ask if the roof was really the only reason he had decided not to go forward with the contract. I probably should not have, and I didn't exactly expect a response, but couldn't help myself from asking without the game of telephone through agents. He never responded. I do wonder how this ended so badly. It seemed hostile when he told our agent he wouldn't share his inspection report because he himself had paid for it, yet said he was going to make a lower offer based on his report. How could we even consider to accept that without privy to the inspection report? Now my husband and I are worried are there other things wrong with the house. Our realtor was at the inspection and he keeps reassuring us there really isn't, that these buyers are using a roof they knew about to get out of the deal.

    Who knows why buyers back out? We had one back out during attorney review, never got to the inspection stage. FWIW, the buyer doesn't have to share the report with you, and if they did, you might have to fix what you know about or disclose it.

    Could be anything from the school system to a registered sex offender that you don't know about. It could also be that buying a house was too stressful for them as a couple. Maybe they work pretty far from the house, with gas going up they changed their minds. Could be anything, but apparently they used the report to get out of it.

  • auntciss

    Roselvr, thanks for your words of wisdom. We were indeed lucky to get an offer so quickly. I hope we can repeat that magic once more!

    Funny you mentioned gas prices: She works in NJ, so that could be part of it. Our agent told us her mother is also unhappy about their move to NY. Fortunately we have no sex offenders nearby here, though I made the sad discovery that there is a sex offender living in my grandmother's old house.

    One last thing: Our agent told us we do not give a seller's disclosure. It is no longer done in NY. Interesting, as when we househunt in NJ, sometimes the disclosures are right there on the table.

    Here's hoping for some good showings for all of us sellers this weekend.

  • sweet_tea

    I vote for getting the roof done now. Then you can market the home with a new roof. Otherwise, even with the credit, you are really flagging a major flaw and the buyer will have the hassle of hiring a roofer. Getting a roofer is very stressful for many folks and a hassle even for folks that are used to hiring out contactors.

    Plus with the new roof, the home will likely bring some lookers that stayed away from looking because they didn't want the roof issue (even with the credit).

    I sold (FSBO) within the past year and had an old roof. I went ahead and got it reroofed before putting on the market. The home looked sooo much better with the new roof. Plus everything else was in real good condition andthe roof was the only problem area. I know that old roof would have scared off many buyers.

    A roof is probably the #1 issue that folks worry about as being problematic when buying a home. You need to erase that fear with a new roof asap.

  • xamsx

    auntciss: One last thing: Our agent told us we do not give a seller's disclosure. It is no longer done in NY.

    If you do not fill out the disclosure in NYS, you owe a $500 credit to the buyer at closing.

    NYS Property Condition Disclosure Statement

  • auntciss

    Hi, Xamsx. Yes, we were already made aware of the $500 credit to the buyer at closing. This has become standard practice in our area in lieu of giving a seller's disclosure.

    Sweet tea, since you knew you were putting the house up for sale, how did you go about getting a moderately priced roof? And did you have to tear off more than one layer? Thanks in advance.

  • xamsx

    I take umbrage to the "It is no longer done in NY" which is untrue. In my area of NYS it is very much done. While all real estate is local, a blanket statement pertaining to an entire state that is not accurate does not help anyone searching for information on this forum.

  • auntciss

    Well then my apologies for generalizing about NY. Then seller's disclosures are no longer customarily given, as of the past couple of years, where I am, in New York City, according to two realtors I interviewed and our attorney. Two friends of mine who recently sold houses nearby told me the same thing. They didn't give sellers' disclosures either.

    In my case I have nothing to hide (in fact just the opposite, having been upfront about the age of our roof from the start), so this $500 credit seems like an unnecessary expense to me. But at the advice of our attorney, we'll give the credit instead of giving a disclosure.

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