Should I Ask for a Repair or a Credit When Buying a Home in San Diego?

Two Ways to Address Inspection Findings

When your San Diego home inspection reveals issues that warrant negotiation with the seller, you have two primary options: ask the seller to complete specific repairs before closing, or request a credit at close of escrow that reduces your closing costs or down payment requirement. Each approach has advantages and disadvantages depending on the situation.

The Case for Requesting a Credit

• You control the quality: With a credit, you hire your own contractor and ensure the work is done correctly
• You can time the work: Complete repairs after move-in on your schedule
• More flexibility: You can allocate the credit across multiple smaller projects
• Cleaner closing: No waiting on seller contractor scheduling or quality disputes
• Preferred by most experienced buyers and agents in San Diego

The Case for Requesting Repairs

• Lender requirements: FHA and VA loans may require certain health and safety repairs to be completed before the lender funds the loan
• Major structural work: Complex repairs are sometimes better managed by the seller since they have homeowner's insurance coverage for the period before close
• Seller is highly motivated: In some situations, seller completing work signals commitment to the deal

How Credits Work Mechanically

A credit at close of escrow appears on your settlement statement as a reduction in the funds you owe — effectively lowering your cash to close. Lenders have limits on how much seller credit they will allow — typically 2 to 6 percent of the purchase price depending on the loan type and down payment. Confirm with your lender that the credit amount does not exceed their limits before submitting the request.

Combining Credits and Repairs

Many San Diego transactions result in a hybrid approach: the seller makes repairs for the items that lenders require or that present liability concerns, while issuing a credit for cosmetic or elective improvement items. Rieder Homes Group negotiates these arrangements regularly and knows how to structure requests that are accepted by sellers and approved by lenders.

Related Reading on RiederHomes.com:

→ Blog #96: Negotiating After Inspection

→ Blog #89: Contingencies Explained

→ Blog #86: Making an Offer

→ Blog #6: Buyer Closing Costs

— Mance Rieder, Broker Associate | Rieder Homes Group | REAL Broker | riederhomes.com | 858-295-0556