Once the buyer's inspection report comes back, every seller hits the same decision. Do we fix what the buyer asked for, or do we give them money instead? I tell people to give a credit almost 100% of the time. That goes for both sides of the deal. Credits are usually cleaner, faster, and fairer than seller repairs, and they keep the closing on track. But there's a right way to do it. The number should come from a real quote, not a guess, and it has to fit inside what the buyer's lender will actually allow. Here's how I think about repairs versus credits, and the mistake that can blow up a Cottonwood Heights deal at the last minute if nobody catches it.
Why Credits Usually Beat Repairs
Think about it from the buyer's perspective first. If the seller does the repair, the seller is in charge of the work. They're on their way out of the house, they don't want to spend any extra money, and they're going to buy the cheapest materials they can find at Home Depot. That's not a knock on sellers. It's just human nature. The buyer is the one who has to live with that repair for the next ten years, and they'd usually rather choose their own contractor and their own materials.
Now flip it to the seller's side. The buyer is telling you something is wrong with your house. You want to fix it yourself. You don't want to give them money because it feels like you're being taken advantage of. But at the end of the day, you shouldn't be adding things to your list of what you need to do before you move. You already have a bunch of things to do. You're packing, coordinating movers, maybe buying another home. Just give them the money for it.
Credits also avoid a lot of headaches. With repairs, someone has to verify the work was done, the buyer may want receipts or a reinspection, and if the contractor is booked out three weeks, the closing date can be in trouble. A credit gets settled on paper and the closing moves forward.
Back the Number With a Real Quote
People overpay all the time for things after an inspection. A buyer's agent throws out a number, the seller panics, and somebody agrees to $15,000 for a repair that actually costs $6,000. Or the seller lowballs it and the buyer feels insulted. Either way, the negotiation turns into an argument about made up numbers.
So whenever we're asking for concessions or giving them, I recommend we get an actual quote from somebody who does the work. Say the inspection shows the roof needs to be fully replaced. We get a real quote from a roofer that says, "This is how much it's going to cost to replace the roof." Then we hand that quote to the other side and say, "This is what we got. This is what we're asking you to cover." It's not a made up number. It's grounded in reality, and it's a lot harder to argue with.
In Cottonwood Heights, the common big ticket inspection items are pretty predictable for the age of the homes. Roofs that have taken years of heavy snow, older furnaces and water heaters, sewer lines on older lots, and sometimes drainage or grading issues on homes closer to the foothills. Getting quotes for those items quickly, during the due diligence period, keeps the negotiation moving.
The Lender Limit That Can Sink a Deal
This is the part a lot of people miss, and it's a big one. The buyer's lender will only allow a certain amount of seller concessions depending on the loan type. A seller credit has to stay under that cap, and it usually has to go toward the buyer's actual closing costs and prepaid items, not cash in their pocket.
Here's what the caps commonly look like. For conventional loans on a primary home, the limit is generally 3% of the price if the buyer is putting less than 10% down, 6% if they're putting down 10% to 25%, and 9% if they're putting down 25% or more. FHA loans generally allow up to 6%. VA loans generally cap certain seller concessions at 4%, with normal closing costs treated a little differently. Investment property loans are usually capped at 2%.
There's another catch. Even if the credit is under the cap, the buyer can only use it for eligible costs. If a buyer's total closing costs are $12,000 and you negotiate a $20,000 credit, they may not be able to use the extra $8,000. That money can just disappear from the deal.
That's why the agent needs to be aware of this and talking with the lender. We need to know what type of loan the buyer is using and what the cap is for seller concessions. The last thing we want to do is negotiate a big credit and then find out the lender won't let the buyer use it. When the credit doesn't fit, we can switch part of it to a price reduction instead, which gets to a similar place financially for both sides.
When a Repair Still Makes Sense
There are a few cases where a seller repair is the better move. Some loan types have property requirements, so if an FHA or VA appraiser flags a health or safety issue, like peeling paint on an older home, missing handrails, or a broken heating system, the lender may require it to be fixed before closing. In that case, a credit won't solve the problem, and the repair has to get done.
Small, simple fixes can also be easier to just knock out. If it's a loose railing or a missing GFCI outlet, it's often faster to have a handyman handle it than to negotiate over it. And if the buyer's loan is right at the concession cap, a repair might be the only way to address an issue without changing the price.
Outside of those situations, the appraiser usually isn't going to change the repair versus credit decision much. The bigger factor is the lender's rules.
How to Handle It as a Seller
When the inspection request comes in, don't react emotionally. Look at what's actually being asked for, separate real issues from minor wear and tear, and get quotes for anything significant. Then decide with your agent whether a credit, a price reduction, a repair, or a combination makes the most sense. Remember that every home has something on the inspection report. A reasonable response keeps your buyer and your timeline intact, and that's usually worth more than winning every point.
Frequently Asked Questions
Is it better to offer a repair credit or fix the problem before closing?
In most cases, a credit is better for both sides. The buyer gets to choose their own contractor and materials, and the seller avoids managing repairs while trying to move. Credits also avoid delays from contractor schedules and disputes over whether the work was done properly. The main exception is when the buyer's lender requires a repair before closing, which can happen with FHA and VA loans if the appraiser flags a health or safety issue. Small, quick fixes can also be simpler to just handle. For anything significant, base the credit on a real quote from a licensed contractor, and confirm it fits within the buyer's loan limits for seller concessions.
How much can a seller give in closing cost credits?
It depends on the buyer's loan. For conventional loans on a primary home, seller concessions are generally capped at 3% of the price with less than 10% down, 6% with 10% to 25% down, and 9% with 25% or more down. FHA loans generally allow up to 6%, VA loans generally cap certain seller concessions at 4%, and investment property loans are usually limited to 2%. On top of that, a credit can usually only cover the buyer's actual closing costs and prepaid items. If a credit is larger than what the buyer can use, the extra may be lost, so agents should confirm the cap with the lender before agreeing to a number.
What happens if the seller credit is more than the buyer's closing costs?
Typically the buyer can't receive the extra as cash, so the unused part of the credit may simply go unused. That's money the seller gave up without it helping anyone. To avoid this, agents should check the buyer's estimated closing costs and the loan's concession limit before finalizing a credit. If the credit would exceed what can be used, the difference can often be handled as a price reduction instead. Sometimes buyers can also use extra credit toward things like a rate buydown, depending on the lender. Coordinating with the lender early prevents a frustrating surprise right before closing.
Should sellers get their own repair quotes after a home inspection?
Yes, it's a great idea. Buyers sometimes request credits based on rough estimates, and those can be much higher or lower than the actual cost. Getting a written quote from a licensed contractor gives both sides a real number to work from and makes the negotiation much less emotional. It's also helpful when a buyer's quote seems high, since you can compare. For bigger items like roofs, sewer lines, furnaces, or electrical work, getting quotes during the due diligence period keeps the deal moving and helps everyone reach an agreement that's fair and grounded in reality.
If you're selling in Cottonwood Heights or anywhere on the east bench and you've got an inspection request in front of you, reach out. We'll help you sort the real issues from the noise, get real quotes, and structure a response that keeps your deal and your closing date on track.
