I’ve been ranting and raving about hail-damaged roofs and how messed-up homeowners insurance is. While digging into this topic with a number of roofing contractors and insurance professionals, I stumbled across some very important information regarding the 15-year mark for roof coverings.
Insurance companies hate them. If you’re planning to purchase a home with a roof that’s more than 15 years old, you might run into some difficulties with your lender and insurance company.
Replacement cost vs. actual cash value
If your homeowner’s insurance covers the replacement cost of your roof, this means you could have a dilapidated 21-year-old roof get hit with a hailstorm, and your homeowner's insurance would cover the full cost of a brand-spankin'-new roof.
Here’s a good comparison: You total your 1999 Ford F150, so you go to your auto insurance carrier. They replace your old beater with a 2020 Ford F150. That would be completely insane, right? Well, that’s how it works for roofs if your insurance policy covers replacement costs. That’s why I call this “winning a new roof.”
If your policy covers actual cash value, it means you get a depreciated value settlement if a hailstorm trashes your roof. This makes a heck of a lot more sense to me, but I understand that it could also put some cash-strapped homeowners into a bind.
The 15-year mark
Homeowners insurance companies regularly send out notices to their clients with roofs over 15 years old, switching them from replacement cost to actual cash value for their roof. These same insurance companies will only write actual cash value policies for homes with roofs over 15 years old.
That’s completely understandable, but the problem is that many lenders require a replacement cost insurance policy for the roof, regardless of the age. So what are you supposed to do if you’re buying a home with a roof that’s more than 15 years old and you’re not paying cash for the home? You’ll need to shop around for the right insurance company. They’re out there, but you’ll need to pay a lot more for insurance.
How to determine the age of a roof
As a home inspector, I make no attempt to determine the age of a roof. I’m not aware of any reliable carbon-dating method for roofs either. I’m very good at estimating roof ages, but every once in a while I’ll be a fair bit off in one direction or the other.
To determine the exact age of a roof at a home you’re buying, it’s helpful to ask sellers for that information. If that’s not possible, check the permit history for the home.
As a courtesy to our clients, we order BuildFax reports with all of our home inspections and provide them to our clients. These reports frequently contain the permit history for roof replacements.
When none of these things is available, we can sometimes find date codes on roof vents, but that’s only a clue. All it really tells us for certain is the age of the roof vent.
Lessons for first-time buyers
If you're saving for your first home, there's no shortage of advice out there — some of it questionable. Here's what you need to know, courtesy of NerdWallet's Sara Rathner.
Things will break
I've lost count of the handymen, electricians and plumbers who have paraded through the home my husband and I bought in October 2019. As I type this, our dryer is being repaired for the second time since we moved in. All told, we've spent around $1,300 on small fixes.
Repairing problems yourself is cost-effective, but only if you know what you're doing. If a repair involves dangerous work, or you lack the skills and equipment to do it safely and correctly, hire a licensed and insured professional.
What should you do?
- PAY CLOSE ATTENTION TO THE HOME INSPECTION. "Leaking roofs, mold, electrical and plumbing issues are the mostly commonly noted concerns on an inspection report," says Day Coker, owner of AC by Day C, an HVAC maintenance and repair company based in High Point, North Carolina. If the inspection turns up problems, negotiate with the seller to either repair them or lower the selling price.
- FIND OUT THE AGE OF MAJOR APPLIANCES. When you can estimate how many years an appliance has left, you can save up for its replacement.
- CREATE A REPAIR FUND. Aim to save around $5,000, says Chelsea Lipford Wolf, co-host of the "Today's Homeowner" TV show and creator of "Checking In With Chelsea," a home improvement blog and video series. "That would cover most home systems that you would need to repair to keep your house running."
You'll want to make your house a home
As a renter, you may have put up with lumpy sofas or rickety chairs, thinking eventually you'd have "real" furniture in your own home like the kind you see at a carefully staged open house. But you're purchasing a structure; the furnishings typically don't come with it.
We spent around $8,000 on furniture this year. Another sneaky expense? Smaller accessories like towel racks, shower curtains, shelves, and storage bins that make a space functional.
What should you do?
- SAVE ON FURNITURE AND DECOR. Brand-new, solid wood furniture is expensive, but antiques are well-constructed and can be had for a fraction of the price. Between antique stores, estate sales and Craigslist, we spent less to score high-quality pieces.
- DO THE SMALL STUFF YOURSELF. When in doubt, watch a tutorial on YouTube or ask for guidance at a hardware store. I've hung art, shelving and curtain rods, and our current project is painting our guest room, which doubles as my office. We hire a handyman only for more complicated work.
- PLAN FOR THE BIG STUFF. "Beyond the first year, that's when you see people taking on bigger projects," Wolf says. "They've had a chance to live in their house and use the space." Begin to budget for renovations, especially if you need to hire a general contractor. Wolf recommends getting on the contractor's schedule during their low season and buying some items when they happen to be on sale, even if the installation has to wait.
Even 'move-in-ready' homes need work
A new neighbor told me she spent $500 on an electrician to replace older, ungrounded electrical outlets throughout her house. We lucked out with modern outlets, but not enough of them. We hired an electrician at $75 an hour to install more than a dozen additional outlets. Neither our house nor our neighbor's was sold as a fixer-upper.
"The first year of homeownership is usually spent finding out all of the flaws you didn't notice during open house and the final walkthrough," Coker says.
What should you do?
- BE NOSY AT THE OPEN HOUSE. Pepper the real estate agent with questions, flip all the light switches and open all the closets. Look for furniture in an illogical place, which may be covering damage. "It's perfectly acceptable to lift up a rug to make sure there's nothing funky under there," Wolf says.
- ASSESS WHAT CAN WAIT FOR LATER. Your home inspector can identify what needs to be fixed now and what can wait. You can begin saving for future renovations while you make do with the cramped kitchen or lackluster backyard.
- DON'T PUT OFF MAINTENANCE. Little problems balloon into expensive repairs. Routine maintenance on even new appliances and systems can help them last longer and run more efficiently.
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