In sales where the buyer has a government guaranteed loan—FHA or VA—all repairs must be done before settlement. During the recent seller’s market, such loans were few and far between, as buyers competed to have their offers accepted. These days, however, when buyers are king, FHA and VA are enjoying a renewed popularity, and in my practice, most sellers are doing repairs. Because of underwriting requirements, contracts that settle with escrows for repairs are largely a thing of the past.

Buyers may initially regard this additional victory over the now humble seller as a welcome one. However, seller-performed repairs are not now, nor have they ever been, a completely desirable outcome for a buyer. The seller assumes the risk and the cost for repair, but, due to the exigencies of time and the contract, also defines the scope and hires the providers, in most pre-settlement repairs. Even the most conscientious and well-meaning seller will not necessarily resolve the repair exactly as the buyer would. Moreover, often the purchase agreement often simply requires that all defects such as leaks or malfunctioning systems be cured, and the buyer is obligated to close—ugly replacement faucets or not–as long as those simple requirements are met. But ugly turns out to be the small stuff: both parties must keep in mind that a settlement date can be jeopardized, along with the buyers’ rate lock-in, if a repair proves particularly difficult for the seller to complete. This is truly an example of winning the battle but losing the war, as plans, schedules and budgets are sacrificed to underwriting conditions. The hardships placed on buyers by seller repairs may not be bad enough to warrant putting an additional 1.5% down and getting a conventional loan, but it could be worth considering!

Note: seek advice from a lending professional when making decisions about financing. For more information about real estate in the Newport News, Hampton, York County, and Williamsburg areas, see my website at www.askformelissa.com or call me directly at 757-869-7070.