When You Can’t Just Throw Money At The Problem

Last week, we talked about buying a home with little or no money down. Here’s another aspect we didn’t cover in that discussion, from a Seller’s perspective.

Here’s the common scenario: let’s say you just accepted an offer and agreed to pay 3% in down payment and an additional 3% in closing costs to the Buyer. And the Buyer does their inspections and then they ask for repairs.

Now, in Tucson, when a Buyer asks for repairs, they have to actually ask for the repairs, they can’t just demand money or a price reduction. What a Buyer can do, however, is ask for the Seller to either 1) do repairs A, B, and C, OR 2) credit the buyer $XYZ to go towards their closing costs instead of doing any repairs.

Many Sellers just throw money at the repairs instead of actually having them done, which saves the Seller some hassle, and the Buyer gets to pick the service provider that they like best. Sometimes, it’s the best solution all around.

BUT - when a Buyer is already getting their down payment and all of their closing costs paid by the Seller, then often the Seller can’t just throw more money at the repairs. The Buyer can’t accept any more money and still get the loan, all the costs are already being paid. The Sellers only choice is to actually have the repairs done.

(Well - potentially another choice would be to buy down the Buyer’s interest rate, and throw money at that instead of repairs, but you’d have to negotiate all that out in a very small window of time and you’d have to run it by the lender to make sure it was all fine with their guidelines, that you weren’t bumping up against other seller contribution limits.)

Just something to consider when you’re contemplating a Buyer’s offer.