Buying a House With a Bad Roof: How to AVOID Mistakes and Regrets

By Lindsay Stefan

Posted on July 5th, 2022

When Does a House Need a New Roof? | Roof Repair Cost | Should You Buy a House That Needs a New Roof? | Getting a Mortgage With a Bad Roof | Getting Homeowners Insurance With a Bad Roof

Bad roof

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Let’s say you found your dream home— but it has a bad roof. What do you do next?

It’s certainly possible to buy a home that needs a new roof — and in some cases, it may be worth it.

But roof repair can be expensive and logistically complicated, too. It will be tough to get home insurance and financing if the property you’re trying to buy has a bad roof, and you’ll probably want to fix the roof before you go through with the sale.

You should understand the risks involved before you proceed. A new roof is arguably the single most expensive home renovation. Even more, the home could’ve sustained hidden water damage that’s invisible even to a home inspector, and may not manifest itself for years.

On a positive note, buying a home with a bad roof can give you a tremendous amount of leverage at the bargaining table, and there are some decent options for financing repairs.

Let’s look at some pros and cons of buying a home with a bad roof — including how to tell if a house needs roof repairs, what costs to expect, and more.

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How to Tell If a Roof Needs Replacing

A standard home inspection doesn’t always include the roof — so, while some inspectors are willing to climb up there and check it out, many won’t, especially if you have a tall house or the weather isn’t ideal.

If you want a roof scrutinized, you’ll need to arrange a specialized roof inspection.

However, you may be able to eyeball the roof yourself. Here’s how:

  1. Simply look at the roof from the ground. If you can see obvious signs of damage, that damage is almost certainly severe enough to prevent you from getting homeowners insurance or a mortgage until repairs are made.

  2. Go inside and check ceilings for water damage. Water stains are a sure sign of roof issues.

  3. Ask the seller for maintenance records so you can check the age of the roof. If the roof is older than 10-15 years, it’s getting to the end of its useful lifespan, and will require repairs or wholesale replacement.

Keep in mind that there are many different types and degrees of roof issues, and they come with different levels of risk. Sometimes, an old roof will have a few small issues, but may be able to just get by with repairs because it’s structurally sound.

Other times, a roof may have serious, advanced rot or leakage, and will need to be replaced. Knowing the difference is key to understanding the kind of investment of time and money you’re looking at.

Whether you're a homeowner preparing to sell or a home buyer facing major roof repairs, we recommend finding a qualified professional. HomeAdvisor is a platform that makes it simple to find and compare roofing specialists in your area to make sure you get the best results.

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What Happens If You Have a Leaky Roof?

If the roof is already leaking, it’s causing damage “downstream,” and this damage may not be visible to you or the home inspector.

Damage from leaks will start in the attic and ceilings. Sheetrock will become stained and eroded, insulation will become wet and may rot, electrical wires could be exposed to water, and the contents of the attic will be ruined.

If the leakage continues, water will penetrate down through the house, draining through walls and light fixtures, ruining what it touches along the way, and contributing to mold and rot.

That’s why it’s imperative that you stop roof leakage as soon as you find it!

How Much Does Roof Repair Cost?

The average roof repair cost varies widely from $10,000 to $20,000. The main factor impacting cost is the size of the roof.

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Costs will also vary depending on the material you choose:

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Weather conditions are also a big factor, as you’re paying per hour for labor. Extreme heat or cold, not to mention snow and rain, make roofing slower and more treacherous— and more expensive.

A standard roof replacement using shingles is the cheapest option, although more expensive options like slate, steel, or copper, or options using additional material under the shingles like plywood, struts, or roof sheathing, may be smart choices for the conditions where you live.

We recommend consulting an experienced local contractor to get an estimate and discuss the best options for your home. Luckily, you can avoid calling around to every contractor in your area and compare your options easily by entering your project information and location on HomeAdvisor.

When to Avoid Buying a House with a Bad Roof

Don’t buy a house if the roof already has leaks. In this case, the house has likely taken irreversible damage. So even if you replace the roof, the hidden water damage is still there, and will almost certainly lead to problems down the line.

If you’re using an FHA loan that requires the home to be in good condition, you won’t be able to buy a home with a bad roof. Similarly, if you’re using a conventional loan, but your mortgage company won’t allow repair escrows, it’s probably wiser to pass on the home.

Finally, if the roof needs major, expensive repairs, and you can’t afford to pay for them, you’ll have no choice but to pass.

It may hurt to walk away from the property, especially if it checks a lot of boxes for your dream home, but think of it this way: a house with a bad roof is a big risk, and you have no way of knowing if your gamble will turn out to be a winning one— or a losing one.

When Should You Buy a House with a Bad Roof?

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It might be worth the risk to buy a house with a bad roof if:

  • The required repairs aren’t too extensive

  • You have money on hand to have them performed

  • You’re able to negotiate a big price discount with the seller

A lot also depends on how much you like the house, what kind of time pressures you’re under, and what your other options are.

Remember, a bad roof is one of the most dangerous— and most expensive— flaws a home can have. You should tread carefully if you’re considering buying a home with a roof you know is flawed.

How to Negotiate a New Roof When Buying a Home

You may be able to persuade the seller to fix the roof to keep the deal in place. This is especially likely if it’s a high-priced property, or it’s located in a buyer’s market.

A great way for a seller to put money aside for a new roof, while ensuring that it’s used for that purpose, is repair escrow. (This is sometimes known as escrow holdback.)

Repair escrow is when the buyer and seller agree to a repair plan, a timeline in which repairs must be performed, and a cost of repairs. Once this plan is drawn up in a written agreement, the seller puts money into an escrow account. After closing, the buyer has a certain amount of time to get the repairs done; if they do so, the money in the repair escrow is released to them.

You can also ask the seller to repair the roof prior to your move-in date, or ask them to lower the overall sale price to cover the cost of a new roof. This would happen during the inspection period, especially if the bad roof has caused other damage to the home found in your inspection report.

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A real estate agent is a vital resource in these situations. They’ll lay out all of your negotiation options and give you a good idea of which ones the seller is likely to concede to.

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Can You Get a Mortgage on a House with a Bad Roof?

It’s very difficult to get a mortgage on a home with a bad roof, mainly because you need homeowners insurance to get a mortgage, and you can’t get homeowners insurance if you have a bad roof.

The sensible move is to replace or repair the roof before you apply for financing. If you don’t have enough cash on hand to pay for the repairs, you still have some options.

How to Pay for a New Roof

The U.S. government, through the Federal Housing Administration (FHA), offers rehab mortgage insurance called FHA 203K that enables you to buy and renovate a house with a single long-term mortgage. If you go with this option, you won’t have to seek separate financing for the roof and the house.

However, if separate financing is something that appeals to you, there’s also the Fannie Mae Homestyle Renovation loan, which is a flexible loan that can be used on any home renovation project.

These options do come with some drawbacks:

  • Higher closing costs and additional fees

  • Closing will take longer

  • Additional paperwork required

  • Fannie Mae loan has a minimum credit score requirement

  • Many lenders don’t offer these financing options, so you may have to search for one

As always, you’ll have to weigh these negatives against the benefits of each financing option. But if you’re trying to finance a home with a bad roof, and can’t afford to pay for repairs out of pocket, these may be your best option at getting insurance, a mortgage, and closing the deal.

How to Get Homeowners Insurance If You Have a Bad Roof

Your insurance provider may not underwrite a homeowners policy for a home if an inspector finds that its roof is in poor condition, or too old (older than 15-20 years). Even if your 20+ year old roof is still structurally sound and leak-free, it could still prevent you from qualifying for homeowners insurance.

This is a major problem, since you can’t get a mortgage without insurance. One option is to get high-risk homeowners insurance, but this type of policy is quite a bit more expensive than standard homeowners insurance. In the long run, it makes more sense to repair your roof and go with the standard homeowners policy.

Recommended Reading

FAQs About Buying a House That Needs a New Roof

Will Insurance Cover a 15-Year-Old Roof?

Some homeowners insurance companies will still cover a 15-year-old roof, but your options may be limited. It may also depend on where you live and what type of weather you experience in that area. You may also be able to purchase high-risk homeowners insurance, though it’s quite a bit more expensive. Learn more about how to get insurance on a house with a bad roof.

How Much Does a Roof Repair Cost?

The average roof repair cost varies widely from $10,000 to $20,000. The main factors impacting cost are how large the roof is, and what roofing materials you use. For replacements and repairs, you’ll be charged by the hour for labor and per square foot of roofing material. Learn more about the costs of repairing a roof.

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Posted in Buying a House, Home Inspection, Real Estate Negotiations