If you are asking who pays for lender required repairs, the short answer is that nobody is automatically on the hook. The buyer’s lender sets a condition. Certain repairs must be done before it will fund the loan, and until they are, the sale sits in limbo. Your sales contract, and whatever you and the buyer can agree on, decides who covers the bill.
That leaves you with a real decision at an awkward moment. You have a signed contract and a closing date, and then a list lands from an appraiser you have never met. Now what? This guide covers where that list comes from, who generally pays, what your options are, and how a cash sale works when you would rather not deal with a lender’s conditions at all. Rules differ by state and by contract. Treat this as general information, and check with a local real estate attorney or your agent before you commit to anything in writing.
What Lender Required Repairs Actually Are
A mortgage lender wants the house to be solid collateral. So it orders an appraisal. The appraiser estimates the value, and on many loans the appraiser also reports problems that could affect the safety, soundness or security of the property.
Government-backed loans spell this out. FHA loans follow minimum property requirements in HUD Handbook 4000.1, and the lender decides which of the appraiser’s noted repairs are actually required. VA loans have their own minimum property requirements, and the VA appraisal comes back as a Notice of Value that lists the items needing repair to meet them, as the VA Home Loan Guaranty Buyer’s Guide explains. Conventional loans follow the lender’s own standards and those of the investor who may buy the loan later. The list can look different from one lender to the next. Expect that.
What lands on it varies. Items that come up often include a roof near the end of its life, active leaks or water damage, exposed wiring, missing handrails, and peeling paint on older homes. Worn carpet and dated kitchens usually do not make it.
Timing matters too. Some conditions must be finished before closing, while others may be allowed after closing, depending on the loan and the lender. Ask the buyer’s loan officer. They know.
So Who Pays for Lender Required Repairs?
There is no single rule. Loan programs set the standard the house has to meet, but they generally leave the question of who pays to meet it to the sales contract and the negotiation behind it.
Three things usually decide it:
- **The contract.** Read the financing contingency, any appraisal contingency and any repair addendum. They say what each side can do.
- **The market.** In a slow market the buyer has more choices, so sellers often pay or give a credit. In a fast market a seller may refuse and wait for the next offer.
- **The size of the repair.** A loose handrail rarely sinks a deal. A roof replacement often does.
Generally, a seller is not required to make repairs unless the contract says so, and a buyer is generally not required to close if the contract lets them walk away over the lender’s conditions, though both points depend on your state and on the exact contract language.
Nobody holds all the cards here. The buyer cannot close without the loan, and you cannot close without a buyer, and that shared problem is the reason so many of these deals end in a middle ground where each side gives up a little.
Your Options When the Appraisal Flags Repairs
Make the repairs yourself
This keeps the deal alive with the same buyer, and when the house is otherwise sound it usually protects your price. You will need contractors and time. The lender may also want proof of the work, such as an invoice or a re-inspection, before it signs off. Small fix? Just do it. The route also fits when you have both the time and the money to see a bigger job through, since a bigger job means more weeks on the clock and a buyer who may not wait for them.
Bigger item? Our guide to selling a house with a bad roof compares fixing it, discounting it and selling as is. Pests are another common flag, and our guide to selling a house with termite damage covers that.
Offer a credit or lower the price
You agree to cut the price or credit the buyer, and the buyer handles the work. The catch is whether the lender accepts that. Some conditions have to be completed before closing no matter who pays, and loan programs put limits on the seller credits they allow, so a credit that looks generous on paper can still leave the lender’s condition unmet. Ask the lender in writing first.
Let the buyer pay
Some buyers are willing, and some lenders allow it. Each loan type and lender has its own rules on timing and paperwork for buyer-paid work. Remember what you are asking, though: the buyer would be spending money on a house they do not own yet. Many will say no. If one says yes, get it in writing, with the lender’s approval attached.
Split the cost
A common landing spot. You fund part, the buyer funds part, and the price may shift a little. It works when both sides want the deal more than they want to win the argument, and it tends to fail when either one is still angry about the appraisal.
Renegotiate the price
A repair list and a low appraised value sometimes arrive together. The buyer can ask the lender to reconsider the value, you can renegotiate the price, or the buyer can cover the gap in cash. Each path changes what you net. Run the numbers before you answer, and include what another month of carrying costs would add if the talks drag on and the closing date slips.
Cancel and move on
If neither side budges, the contract may end. Then you start over. The house goes back on the market, and the next buyer’s lender will order its own appraisal, which means the same problems are likely to show up again and a stricter loan type may flag more of them. Known defects may also need to be disclosed to the next buyer. Disclosure rules vary by state, so ask a local attorney what applies to you.
Questions to Settle Before You Agree to Anything
Get answers in writing where you can. A verbal promise from a loan officer will not help you later.
- Does the lender need the work finished before closing, or can part of it wait until after?
- Will the lender accept a credit in place of the repair, or does the work itself have to happen?
- Who hires the contractor, and does the lender need a re-inspection or proof of completion?
- When does the buyer’s contingency run out, and what happens to the deposit if the deal ends?
- If the buyer walks, can you afford to relist and carry the house through another round?
That last question is the one many sellers skip. Every week of delay has a cost, because the mortgage, taxes, insurance and utilities keep running while you negotiate, and a deal that drags on for a month can quietly erase whatever you hoped to gain by holding out for a better number.
How a Cash Sale Avoids Lender Required Repairs
Lender required repairs exist because a lender is financing the purchase. Take the lender out and the condition goes with it. A buyer paying cash does not need a mortgage appraisal, so there is no lender list to satisfy and no loan waiting on a contractor’s invoice.
The buyer still looks. They price what they see, write the offer to match, and expect you to be straight about anything you know is wrong, because that is what keeps a deal with no lender in the middle clean. If you are weighing that route, our guide on how to sell my house as is covers pricing, disclosure and the contract terms to watch.
Here is how that works with us. Eagle Cash Buyers evaluates properties in 43 states, and whether we can make an offer depends on the property, the title and our buying criteria. We may buy directly or assign the contract. The agreement says which, before you sign. Closing can happen in as little as 21 to 42 days, or longer if you need more time, and you pick the date. We pay closing costs except your mortgage payoff, back taxes and liens, and your share of transfer tax. No agent commission on a direct sale. Our breakdown of what sellers actually pay in a cash sale shows where each cost lands.
Now the trade-off. A cash offer is below what a fully repaired house might sell for on the open market. If you have both the time and the money to fix the house, and a buyer with a loan is willing to wait, listing can net more. That is simply true.
A cash sale tends to make more sense when the repair bill is large, when you cannot carry the house through another round of negotiation, or when a deal has already fallen through once and you do not want to go through it a second time. Our comparison of a cash offer versus listing with an agent lays out the costs on both sides. If the work involves code violations, see selling a house with code violations.
One caution. A cash buyer will still inspect, and what the inspector finds can still lead to a talk about price, and your mortgage payoff and any liens still come out of the proceeds at closing whichever way you sell, so a cash sale removes the lender’s conditions without changing the basic math of what you owe.
Frequently Asked Questions
Can the buyer pay for FHA required repairs?
Sometimes. Whether a buyer can pay, and when the work has to be done, depends on the lender and the loan, and the lender generally has to approve the plan before any money is spent. Ask the loan officer.
Can a seller refuse to make lender required repairs?
Generally, yes. Unless the purchase contract requires the repairs. The buyer may then ask for a lower price, ask for a credit, or end the contract if a contingency allows it. Refusing is a choice, not an exit.
Can lender required repairs be done after closing?
Some can. It depends on the loan type and the lender, and items that affect safety or livability are the ones most likely to be required before closing, so the buyer’s loan officer is the right person to ask before anyone signs a repair addendum.
