What if the Seller Did Not Complete Repairs Before Closing?

By 

Jamie Ayers

Updated 

August 31st, 2019

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When the seller won’t perform home repairs, it can seem like the only option is to cancel the deal. Luckily, there are many ways buyers can recoup these costs, while still closing on their dream home. Find out more about why sellers might not make repairs and how to use this to your advantage.

When buying a home, there’s a lot that buyers need to be aware of, particularly during closing. After the home inspection, most buyers expect the sellers to make all necessary repairs, but that’s not always the case.

There are several reasons why a seller might not complete repairs prior to closing. But your options depend on your purchase agreement.

If you find yourself in this situation, it’s important to understand why the seller might not handle repairs and what you can do to make sure you’re still happy with your real estate deal.

Why Sellers Don’t Always Make Repairs Before Closing

There are many reasons why a seller might not agree to make repairs prior to closing. Sometimes, arranging for repairs could impact the closing date, which might not work for the seller, particularly if they are in the process of moving.

Sellers might also be unwilling to pay for repairs if they can’t come up with the money during this short window of time. Many times, sellers are also in the process of purchasing another home and might not be able to fund the repairs right away.

Sometimes, sellers might not agree to the repairs, because they think they can relist their home and negotiate a better price. This generally won’t work out the way the seller envisions, but it is one possibility to be aware of. If this scenario arises, it’s best to talk with your agent to find out if you should back out of the deal or negotiate further depending on the estimated repair costs and current closing price.

But know, if repairs were agreed upon and written into the sales contract, the deal will not close until the seller holds up their end of the bargain or you release the contingency without the repairs.

Don't end up with a house in need of repairs.

Partner Agents will negotiate on your behalf for the best deal.

Buyer Options When the Seller Won’t Pay for Repairs

If your seller decides not to make repairs before closing, it doesn’t mean the deal is off or that you have to walk out of the sale unhappy. There are a number of ways to make this right with the seller and come to a fair compromise for both parties.

Typically, there are four ways to handle repairs in this situation:

1. The buyer and seller agree to push back the closing date so the seller has time to fund and pay for the repairs. This is typically not an ideal solution for either party, since pushing the closing date back extends the sales process. However, if the seller needs an extra month to make repairs and you can hold off on moving until then, this might be a good compromise to make.

2. The seller prepays for repairs to happen after closing. If the closing date can’t be pushed back, sometimes the seller will prepay a contractor to make any necessary repairs after closing. While this may sound like a fair solution, it’s important to speak with the contractor and do your own research on repair costs to ensure the contractor received enough money to fully fix the issue.

After closing, the repair will become your problem, so if the contractor runs out of money or finds the problem is more complicated, this extra cost could fall on your shoulders.

3. The seller gives the buyer a credit due at the time of closing. This is a common way to compromise repair costs. Once you have estimated how much the repairs will cost, you can arrange to have the seller offer you a credit for this amount that will be due at the time of closing. Alternatively, the seller might agree to a lower closing price, reducing the sales price by the estimated repair cost.

4. Funds can be held in escrow until closing. With this option, the seller can agree to have a portion of their proceeds moved into a separate escrow account, to be given to the buyer at the time of closing. This is often desirable, because the seller does not have to come up with financing before closing,

It’s also favorable to buyers because typically 1.5 times the amount of repair costs is required, in order to ensure any surprise costs and underestimated repairs are covered.

Closing on a home can be a confusing and overwhelming time for a buyer, particularly when they’re worried about required repairs being done. Luckily, there are many solutions to work towards if the seller is unable to pay for repairs before closing or simply cannot extend the sales timeline to accommodate these repairs.

If your seller has decided not to have repairs completed before closing, work with your real estate agent to make sure all options are explored. Your buyer’s agent can effectively negotiate with the seller’s agent on your behalf, to ensure all your needs are met.

Before looking for a home, be sure to find a talented real estate agent near you. Clever can connect you with a local, full-service agent who can help you find your dream home, offer on-demand showings, negotiate on your behalf, and guide you all the way through closing. Best of all, Clever Partner Agents also offer $1,000 Home Buyer Rebates at the time of closing (in states where rebates are legal).

To learn more, get connected with a Clever Partner Agent near you.

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