Michael was buying his first house. We were set to close in late February, in East Grand Forks, on an FHA loan.
Then the appraisal came back with a condition on it. The roof had to be repaired before closing.
If you have never bought with an FHA loan, here is the short version. The appraiser is not only telling the lender what the house is worth. They are also confirming it meets a minimum standard to live in. If something on that list fails, it gets fixed or the loan does not fund. You do not negotiate with the appraiser about it.
So on paper, simple. Fix the roof, close on time.
Except it was February. In the Red River Valley.
Nobody was putting a roof on that house
Asphalt shingles seal with a strip of adhesive that needs warmth to bond. In February here, it does not bond. And even setting that aside, when the weather finally breaks, every roofing company in the valley already has a list a mile long waiting on them. When the listing agent went looking for bids, he could only get one company to come out at all.
One bid. $9,785. And they could not start for weeks.
Michael’s lease was not going to wait on a roofing crew.
What we did instead
The fix is a repair escrow holdback. Instead of the work happening before closing, the money for the work gets locked up at closing and released when the job is finished. The loan funds, the buyer moves in, and the roof gets done when it can actually get done.
Not every lender will do this, and plenty will not do it on a government loan at all. Michael was financing through Zillow Home Loans and they were excellent about it. Their requirement was one and a half times the bid, which is standard, and it exists to protect the buyer. If the job runs over, or the crew tears off the old shingles and finds rot underneath, there is a cushion. So $14,677.50 went into escrow against a $9,785 bid.
We closed in mid March, about two and a half weeks past the original date. The roof went on about six weeks after that.
The part I am proudest of
Somewhere in the middle of all this I asked whether Michael could have a say in the shingles. It was going to be his house. He was going to look at that roof every day for the next twenty years. It seemed strange for the sellers to be the ones picking.
They said yes. Michael chose the color and the style.
He bought a house with a roof problem and ended up with a brand new roof he picked out himself, paid for by somebody else.
What this says about buying here
Two things.
A bad appraisal finding is not the end of a deal. It is a problem with a known process attached to it. What kills deals is not the finding, it is nobody at the table knowing what comes next.
The second one is ours specifically. Our construction season is short. From about November to April there is a whole category of work that simply cannot happen here, and it does not matter how motivated everybody is. If you are buying or selling in the winter in Grand Forks or East Grand Forks, assume something is going to get handled after closing instead of before, and build that into the plan from the start rather than discovering it three weeks out.
An agent from a warm state reads that appraisal and tells Michael to push the closing. Around here you learn to hold the money instead.
