When a buyer sends a repair request after the inspection, a seller has three ways to say yes: make the repairs before closing, give a credit toward the buyer's closing costs, or reduce the price. Making the repair is usually the best answer for safety items, anything the buyer's loan requires, and fixes that are cheap and quick. A credit or price reduction is usually better for cosmetic items, matters of taste, and jobs that cannot be finished properly before the closing date. Most good responses use a mix.

The right mix depends on the buyer's loan, the calendar, and what each item really costs. Here is how to work through it. Your agent, and an attorney where needed, should guide the contract language. This is the practical side.

The three tools, and what each one really does

Making the repair

You hire someone, the work is done before closing, and you hand over receipts. The buyer gets a house with the problem solved. You control the cost, since you choose the contractor and the scope. You also carry the risk: the work has to be finished on time, done to the standard the contract describes, and it may be checked by the buyer or their inspector at the final walk through.

A closing cost credit

You agree to pay a set dollar amount toward the buyer's closing costs and prepaid items. No work happens. The buyer brings less cash to closing and handles the repair afterward, with their own contractor, their own way. This is clean and fast. It has limits, covered below, and a credit is not the same thing as cash in the buyer's hand.

A price reduction

The sale price drops by an agreed amount. This lowers the buyer's loan and, slightly, their monthly payment. It does not give them money to do the repair, which is why buyers short on cash often prefer a credit. For the seller, a price reduction can trim costs that are figured as a percentage of the price.

What a credit cannot do

Two limits catch sellers and buyers off guard.

Lenders cap seller contributions. Every loan type limits how much a seller can pay toward the buyer's costs. On conventional loans the cap runs from 3 to 9 percent of the price depending on the down payment, with the lowest cap applying to the smallest down payments. FHA loans generally allow up to 6 percent, and VA loans have their own concession rules. If the seller is already paying closing costs under the original contract, there may be little room left for a repair credit.

A credit cannot exceed the buyer's actual costs. A seller credit can only offset real closing costs and prepaid items. If the buyer's costs total $7,000 and the credits total $10,000, the extra $3,000 does not go to the buyer. It simply cannot be used. The buyer does not leave the closing with a check for repairs.

When a credit will not fit, the alternatives are a price reduction, doing the repair, or occasionally an escrow holdback, where money is set aside at closing to pay for work completed shortly after. Holdbacks need the lender's approval and are far more common for weather-delayed exterior work than for routine repairs. The buyer's loan officer can say in one phone call how much credit room exists. Find that out before you write your response.

Items you should plan to repair

  • Anything the loan requires. FHA and VA appraisals flag health and safety conditions such as peeling paint on older homes, missing handrails, exposed wiring, a roof at the end of its life, or utilities that do not work. If the appraiser calls it out, the loan does not close until it is fixed and verified. A credit does not solve that.
  • Active problems. A leak that is dripping today, a furnace that will not light, a dead outlet circuit, a broken window. Buyers and lenders both expect a house that functions on closing day, and an active leak keeps doing damage while everyone negotiates.
  • Safety items. Missing smoke alarms, an ungrounded outlet near water, a loose stair rail, a gas smell. These are inexpensive and they frighten buyers out of proportion to their cost.
  • Cheap fixes with expensive descriptions. Inspection reports make small things sound large. "Evidence of moisture intrusion at the plumbing penetration" can be a $20 part and half an hour. Fixing these costs you less than the credit a nervous buyer will ask for.

Items that are better as a credit or reduction

  • Anything involving taste. Flooring, paint, counters, fixtures. If you choose, the buyer will not like your choice. Let them pick.
  • Big projects with a short runway. A roof replacement, a new HVAC system, or major drainage work ten days before closing invites rushed work and delays. If the loan allows the property to close as it is, a price adjustment is safer for everyone.
  • Work the buyer plans to redo. There is no reason to repair a deck the buyer intends to tear off, or patch a bathroom they plan to gut.
  • Items where you and the buyer disagree on scope. If the buyer wants a full replacement and you believe a repair is enough, a negotiated dollar figure ends the argument without either side having to accept the other's contractor.

Price it before you answer

The biggest mistake sellers make is responding to a repair list by feel. A buyer's request often comes with a round number attached, and that number is usually a guess, padded for uncertainty. The inspection report is not a quote either. It describes conditions. It does not price them.

Get the list quoted line by line before you respond. With real numbers you can see which items are $150 and which are $4,000, and build your answer around that. A typical result looks like this: repair the eight small items for less than the buyer feared, offer a fair figure on the one large item, and decline the two that are cosmetic or already reflected in the price. That response is easier for a buyer to accept than a flat no or a flat lump sum, because it shows the problems are being handled.

For a sense of what the common items run, see what inspection repairs typically cost.

Watch the calendar

Tennessee purchase contracts typically give the buyer an inspection period and then a short resolution period for the two sides to agree on repairs. Those windows are counted in days and they are firm. Three timing points:

  • Get quotes inside the resolution period, not after it. A contractor who can turn a line-item quote around in a day or two is worth more here than one who is slightly cheaper and takes a week.
  • Schedule against the closing date. Agree only to repairs that can be finished with time to spare for a re-inspection. Work completed the night before closing leaves no room to fix a problem.
  • Put the agreement in writing. The repair amendment should name each item, the standard for completion, and what proof the seller will provide. "Fix plumbing leak" invites a dispute. "Repair active leak at kitchen sink supply line, licensed plumber, receipt provided" does not.

If you agree to repair, do it properly

A repair the buyer rejects at the walk through is worse than no repair. A few rules prevent that.

  • Use licensed trades where the work calls for it. Electrical, plumbing, HVAC, and roofing repairs done by a qualified contractor come with an invoice that answers the buyer's next question before they ask it.
  • Do what the amendment says. Not more, not less, and not a substitute you think is just as good.
  • Document everything. Before and after photos and an itemized invoice for each line. Hand the package to your agent several days before closing so the buyer's side can review it.
  • Do not improvise it yourself to save money. A homeowner patch on an electrical or roof item often fails re-inspection, and you pay twice.

A simple way to decide, item by item

  1. Does the buyer's loan require it? Repair it.
  2. Is it a safety issue or an active failure? Repair it.
  3. Is it under a few hundred dollars and quick? Repair it. It costs less than arguing.
  4. Is it cosmetic, a matter of taste, or something the buyer will redo? Offer a credit or reduction, or decline if the price already reflects it.
  5. Is it large and impossible to finish well before closing? Negotiate a price adjustment, and confirm with the lender that the house can close in its current condition.
  6. Before offering any credit, confirm how much credit room the buyer's loan has left.

For agents

The seller's decision usually stalls on one missing piece: real numbers, fast. Our inspection repair service quotes line by line from the report, schedules the work against the closing date, and returns photos and an itemized invoice you can attach to the amendment. The details are on our real estate agents page, and this guide to inspection repairs for agents covers how to keep a repair list from threatening a closing. Sellers who have not listed yet can avoid most of this negotiation by handling the obvious items up front, which we cover in which repairs are worth doing before you list.

A repair request is not a sign the deal is in trouble. Nearly every inspection produces one. Sellers who answer it with priced, specific, documented responses tend to keep their buyers and their closing dates.