Seller credit for roof?

Question

Hello.

I'm in the process of purchasing an older 3 unit building in South Chicago and the inspector said the roof is at the end of it's life and it could cost about $20K to replace it. Should I be asking the seller for a credit? If so, how much?

Thanks in advance for any assistance.

Michael Boyle · Answer

@Brandon Sturgill - Thanks Brandon. I just wanted to see what other people would suggest. This is my first investment property.

Craig Jeppesen · Answer

I would ask for the $20, But would take $10. I would redo the roof myself for around $3-5 and pocket the money, but I have installed over 100 roofs before.

Brandon Sturgill · Answer

I'd ask for $20k and see how they respond @Michael Boyle

Even with the seller credit, you'll still have to pay out of pocket for the repair...so maybe consider a backup plan...I'd rather have cash than the credit...have the seller take the full proceeds and write you a check for $10k at closing...

good luck!

Dusty Cady · Answer

@Matta Nguyen Thank you for the insight! Hopefully you find another house! What we did was ask for the seller to pay closing costs, which basically equaled the cost of the roof ($7,500).

Matta Nguyen · Answer

@Dustin Cady hi Dustin,

So i ended up not getting that place, not because of the credit but seller received a better offer. However the solution that we came up with was escrow holdback. So in that term, the seller agreed to hold certain amount of money for problem that needed to be fixed in escrow account after closing ( i think they have to put certain percentages higher than the bid from verified contractor). After close, the money is going to be used to fixed the problem, whatever left will be returned to seller.

This escrow holdback will be available depends on lender. You should definitely check with your lender to see if they have this option. If they do, verify what needs to be done.

Hope that help!

Dusty Cady · Answer

@Matta Nguyen @Michael Boyle  What the resolution here for you? We are negotiating right now for 2 units. One of the roofs has to be replaced. With an FHA loan you can now get a 6% credit back at closing to cover some costs. So we can finance in the cost of the roof ($11K) We are actually offering this to the seller today. I'll let you know how it goes.

Brandon Sturgill · Answer

@Matta Nguyen Can you get a "lump sum" contribution from the seller...discount purchase price?

Matta Nguyen · Answer

@Brandon Sturgill: Hi Brandon, I'm in the similar situation with her as well. Haven't submitted the contract yet but seller has noted that they would be willing to credit $20k. Personally I want to money to fix it myself, however if following the lender's policy I'm only able to get 3% credit from sellers and it will go to closing cost... You mentioned that we can ask the seller to take full proceeds and write the check at closing. When in the process + How do you mention that to them and in which form of contract?

Thank you!

Michael Boyle · Answer

@Ted Kuhlmann Thanks Ted. My attorney did say cash at closing was illegal so there is that. But the bank told me that if we had a separate contract to pay for a portion of the roof repair that would be fine. Not sure exactly how that works and if all is above board.

Seller credit for roof?

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