Q&A: The Inspection Found a Problem. Repair, Credit, or Price Reduction?

A question I hear from both sides of a sale: the inspection turned up something real, so what happens next? A sewer line issue, a worn roof, an aging air conditioner. The finding is rarely the end of the deal. It is the start of a second, smaller negotiation, and there are three common ways to settle it.

Option one: the seller makes the repair. The seller hires a contractor and fixes the item before closing. The buyer gets a home with the problem handled and no extra cash out of pocket. The tradeoff is control. The seller picks the contractor and the scope, and the work has to finish before closing. If you go this route as a buyer, ask for a licensed contractor, a written invoice, and time to verify the work.

Option two: a credit at closing. The seller keeps the price where it is and gives the buyer a credit toward closing costs. The buyer then handles the repair after closing with a contractor of their choosing. Sellers often like this because nothing has to be scheduled before closing. One caution: loan programs have their own rules on how much a seller can credit and what a credit can be used for, so ask your lender before you write the request.

Option three: a lower price. The price drops to reflect the repair. This is simple on paper, but a price reduction does not put repair money in the buyer's hand at closing. It lowers the loan amount and the payment slightly, and the buyer still pays the contractor out of pocket. Buyers who are tight on cash after closing should think that through.

How to decide. Start with a written quote from a licensed contractor who has seen the problem. A number from a quote carries more weight in a negotiation than a guess from either side. Then look at what matters most to you: cash after closing, control over the work, or keeping the closing date.

For sellers, the question is the same one in reverse. If this buyer walks, the next buyer's inspector is likely to find the same item, and a known material defect generally has to be disclosed. Dealing with it now is often the cleaner path.

Your purchase contract sets the deadlines and the steps for these requests, so read it and stay inside the timelines. A seller is not always required to agree to a repair request, and a buyer's choices at that point depend on the contract.

This is general information, not legal or tax advice. For contract questions, ask an attorney. For loan questions, ask your lender.

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Jon Hegreness, REALTOR / Associate Broker, Howe Realty
(623) 826-0888 / JonHegreness@gmail.com / License BR540940000
9059 W Lake Pleasant Pkwy, B-200, Peoria, AZ 85382
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