Homeowners Insurance With a Bad Roof

WRITTEN BY: Mark Romero


Seasoned real estate brokers will tell you that nothing is a deal-breaker if you want the property bad enough.

Others will tell you that a bad roof is one of the top reasons a deal doesn’t go through. Of course, at the end of the day, you are the one who makes the determination, and your perspective will influence that — are you buying or selling?

A home’s roof is a major architectural feature. How it looks is going to have a significant impact on curb appeal and a potential buyer’s first impression. Even if it looks fine, damage can be lurking under the surface.

A roof is expensive. If you are a buyer, you don’t want to be burdened with an unexpected roof repair, and as a seller, you want to ensure a return on investment if you decide to repair it.

Roof from a Buyer’s Point of View

You will learn the value of a legitimate, experienced, and ethical home inspector. Most real estate contracts have a contingency clause that allows the buyer to have an inspection (which the buyer pays for) before closing.

It’s highly unlikely that the inspector will be a master electrician, plumber, structural engineer, or roofing expert, but they should have sufficient experience to see potential problems. 

If the roof pops up on the inspector’s report, have a free inspection/estimate completed by a reputable roofing contractor. That report should give you details and a cost for repair/replacement. With those details and a written estimate, you can begin negotiations with the seller, either having them do the repairs or offering a price reduction that will make you whole when you do the repairs.

If you’re financing your house, a too old roof is a deal-breaker. 

If you are getting a federally insured mortgage, FHA regulations require that the roof have at least two years left on its life, or the loan can’t be issued. 

If the roof is in poor condition, you may not be able to get homeowner insurance for your new house which means you won’t get a mortgage as well.

The Homeowners Insurance Connection

A bad roof could be a deal-breaker for your home insurance company.

Once you buy a house, you become responsible for the roof for any damage, even if it was missed in the inspection. Insurance companies see roofs as the source of excessive claims. If the roof fails, the losses could be dramatic. 

The trend with insurance companies today is not to accept new policies on homes with roofs 15 to 20 years old without an inspection report. Some will only insure for cash value rather than replacement cost. 

Once you put a new roof on, normal coverage can be restored, but you will be on the hook for the repair. 

Roofs from a Seller’s Point of View

There is no easy way for a seller when the roof needs repair or replacement. Nobody wants to put down $5,000, $10,000, or more on a roofing job without some assurance of a return on that investment. But the real question is, what constitutes an ROI?

In many states, once you know there is a problem (inspection report), you are obligated to disclose that problem to any new prospective buyers should your original deal fall through. Failure to do that could constitute a breach of contract and expose you to legal liability.

So without a new roof, you may not be able to sell your house at all. 

If you have the money, you could replace the roof with new roofing design materials and make the roof not just a structural improvement but a selling point. Energy-efficient roofing materials, new materials (like steel), and a virtual rainbow of colors can turn a roof into a design feature that enhances overall property value.

If you’d rather not shell out the cash on a home you won’t be living in, you could work with cash buyers. In a seller’s market in a good location, you may find some takers, even with a bad roof.