What to do when seller is slow with repairs

Q: I’m under contract on a house and some of the work the seller agreed to do still needs to be done and we’re closing soon. They’re asking if they can pay for the work now and the contractor will finish it afterward. Is this a good idea or should I delay the closing until the work is done?

A: The vast majority of the time this scenario works out just fine. People often close on time and find a solution that makes everyone happy. But there are risks to closing before repairs are complete and sometimes it can be frustrating and difficult to get the work successfully completed after closing.

The severity of the repairs in question might influence your decision, as will the relationship built with the seller and your confidence in the contractor. However, there are a few options to help avoid the potential pitfalls of this situation.

If you’re comfortable moving forward and closing on time, (and if the remaining work hasn’t already been paid for) you can have the seller (or title company) issue a check to the contractor but give it to you at closing.

This means you have the funds to pay the contractor but they don’t get paid until the work is done to your satisfaction. The contractor will expect payment at closing for any completed work but at least the appropriate amount for the missing items can be withheld.

If you’d rather not be at the mercy of a contractor whom you didn’t pick and don’t know, you can skip the remaining repairs altogether and have the seller give you a closing cost credit instead. Then you get the final repairs done to your satisfaction after closing.

The risk with this option is you will be completely responsible for the costs even if you find more issues when the work gets started or if the costs exceed the credit the seller provided.

Another factor with getting a credit at closing is you must have enough closing costs to offset the credit. The seller cannot help you with your down payment if you’re getting a mortgage. You can either get a credit or reduce the purchase price if you’re paying cash for the house.

Finally — and to answer your question —you can postpone the closing if you don’t feel comfortable with the above options. This can be a great hardship for a seller, particularly if they are buying another house contingent upon this sale.

Everyone wants a win-win situation where all of the parties are satisfied, but sometimes you have to agree to something that isn’t ideal but allows the process to move forward.

So, talk to your real estate agent and figure out what works best in the situation. Only you can decide what feels right. Just try to keep all of the different variables, players and options in mind when making the decision. And most important, congrats on the new house and enjoy!