Repair Credit Calculator

About the Repair Credit Calculator

After a home inspection, buyers often request repairs or a credit in lieu of repairs. As a seller, you have three primary options: complete the repairs yourself, offer a credit at closing for the buyer to handle repairs, or reduce the sale price. Each option affects your net proceeds differently.

Repair credits are attractive because they're simpler — no scheduling contractors, no delays, no quality disputes. However, the credit amount may not match the actual repair cost. Sellers who get their own quotes often find repairs cost less than the buyer's estimate, while lump-sum credits are sometimes inflated.

This calculator compares the financial impact of all three approaches: completing repairs yourself, offering an equal credit, or adjusting the sale price. It accounts for the fact that repairs you complete yourself often cost less than a credit amount requested by the buyer, and it shows how a price reduction affects both commission costs and net proceeds.

When This Page Helps

Choosing between a repair credit and doing repairs yourself can save thousands. A $5,000 buyer-requested credit might only cost $3,000 if you hire your own contractor. This calculator shows the net proceeds impact of each option so you negotiate from a position of knowledge.

How to Use the Inputs

1. Enter the current sale price.
2. Enter the commission rate.
3. Input the buyer's requested repair credit amount.
4. Enter your estimated actual repair cost (your contractor quotes).
5. Optionally enter an alternative price reduction amount.
6. Compare net proceeds across all three scenarios.

Example Calculation

Tips & Best Practices

• Get 2–3 contractor quotes before responding to repair requests — your costs may be 30–50% less than the buyer's estimate.
• Repair credits are simpler but you're paying full asking price; doing repairs may be cheaper.
• Lenders may cap buyer credits at 3–6% of the sale price depending on loan type.
• A price reduction lowers commission costs slightly, making it marginally better than an equal credit.
• Document completed repairs with receipts and photos to prevent further negotiation.
• Some repairs (roof, HVAC, structural) are lender-required and must be completed, not credited.

The Three Negotiation Approaches

When buyers request repairs after inspection, sellers can: (1) complete repairs using their own contractors, (2) offer a closing credit for the estimated cost, or (3) reduce the sale price. Each has pros and cons. Repairs give you control over cost and quality. Credits are simple but may overpay. Price reductions marginally reduce commission costs.

Getting Accurate Repair Estimates

The buyer's inspector identifies issues but doesn't provide repair costs. Buyers often get inflated estimates or use worst-case figures. Counter by getting 2–3 licensed contractor quotes for each item. Present these quotes in writing to justify a lower credit amount or to support completing repairs yourself.

Repair Credits and Loan Approval

Excessive credits can raise red flags with lenders, who may see them as disguised price reductions. Credits that exceed lender-allowed concessions for the loan type will be rejected. Work with your agent to structure credits within allowable limits and document the repair basis clearly.

Frequently Asked Questions

• What is a repair credit?

  A repair credit (also called a seller credit or closing credit) is money the seller gives the buyer at closing instead of completing repairs. The buyer receives the credit and handles repairs after closing. It appears on the closing disclosure as a seller concession.

• Is it better to do repairs or give a credit?

  Financially, doing repairs yourself is usually cheaper because buyer-requested credits are often inflated. However, credits are simpler and faster. If your contractor quotes are significantly lower than the requested credit, do the repairs. If the difference is small, a credit avoids hassle.

• Can the buyer use the credit for anything?

  Technically, a closing credit reduces the buyer's cash needed at closing and can be applied toward closing costs, prepaids, or rate buydown. The buyer is not legally required to use it for the specified repairs, though that's the stated purpose.

• Are there limits on seller credits?

  Yes, lenders cap seller concessions: conventional loans allow 3–9% (depending on down payment), FHA allows up to 6%, and VA allows up to 4% plus reasonable closing costs. Credits exceeding these limits may require a price reduction instead.

• How does a price reduction compare to a credit?

  A price reduction slightly lowers your commission cost (since commission is a percentage of the lower price), making it marginally better than an equal credit. However, the difference is small — on a $400,000 sale with 5% commission, an $8,000 reduction saves $400 in commission vs. an $8,000 credit.

• What repairs are non-negotiable?

  Lender-required repairs must be completed before closing and cannot be credited. These typically include: active termite infestation, structural issues, roof leaks, safety hazards, and missing systems (no working HVAC, no hot water). The appraiser identifies these as conditions of financing.