There’s ALWAYS a debate when it comes to the best way to tackle closing repairs.
Should the seller complete the repairs? Or should they issue the buyer a credit at closing?
Now, arguments can be made on either side depending on the nature of the deal, the parties, and the repairs.
BUT, there is one thing everyone should agree on:
If the repairs are serious enough to be negotiated, they should be completed.
Why, as a buyer – after finding and securing the right home – would you risk the deal UNLESS the repairs were critical?
And yet, there are many cases (we’ve seen them!) where buyer credits are issued and the repairs aren’t completed.
And that’s the BIG issue with buyer credits…
…it’s a cash payment. And once the cash is in-hand, there’s no assurance that the repairs will be completed.
Further, in many cases, the credit is issued as a discount on the purchase price – not a lump sum that’s available immediately. This, of course, makes it even harder to complete the repairs.
Now, there are a number of reasons why repairs don’t happen. Regardless, this is a lose-lose situation based on the premise of the negotiations: to repair defects that are detrimental to the home’s health and the buyer’s enjoyment.
Those defects will only get worse, which can lead to larger and more costly repairs down the road.
And don’t forget about the agents.
We all know the most successful agents are the ones who take a long-term approach to building their business. Understanding the value of a lifetime client relationship (repeat business, referrals, etc.), they think beyond the transaction.
Agents on both sides, when negotiating, know full well that with a credit there’s no guarantee the repairs will be completed.
It’s a little easier, perhaps, for the seller to stomach this given they are moving on (even if they may be overpaying).
But, as the buyer’s agent, you should want those repairs completed; if they aren’t, you’re going to deal with them down the road when YOU list the home. Those defects? They’re documented, material, and probably much worse than they were 5 years ago.
A straight-up buyer credit, on its own, is a short-term solution for all involved.
The 360° Win.
If the seller is unwilling to complete the repairs, the surefire way to ensure they get done is to offer a repair credit to be held in escrow by the title agency (or lawyer, depending on the state).
Because the negotiated credit can only be used for repairs, it is much more likely that the repairs will be completed.
It’s a short-term solution with a long-term mindset – a win for buyers, sellers – and agents.
Escrow and PunchList
As a closing repair specialist, PunchList is an ideal partner when issuing repair credits via escrow.
Not only can a PunchList estimate be used to reach an agreement on repairs, it’s backed by contractors who will knock out the repairs. The repair funds in escrow will cover the repair costs – guaranteed.