Ask a REALTOR: Do I Have to Make Repairs Listed on the Appraisal?

Q: I’m selling a home and the appraiser has said that significant repairs are needed. Am I required to make these repairs?

A: Depending on how your purchase contract reads, you are typically NOT required to make repairs. In other cases you may be required to make repairs up to a certain dollar amount. Just keep in mind, however, that not making repairs stipulated on an appraisal could cost you the sale.

The purpose of an appraisal is to ensure that the purchase price of a property is in line with the property’s value. It’s based on recent sales of similar properties close to yours. The value of your property is adjusted for size, age, features and condition. Additionally, appraisers look for health and safety issues that could affect value and increase homeowner liability.

That said, if an appraiser stipulates repairs, the property is considered to be of lesser value until those repairs are made. This is not the same as a home inspection where repairs can be negotiated. Appraisal stipulations tend to be serious and they become a condition of the loan. If the buyer is getting a loan, this could mean a no-go for the sale. The They will not get loan approval while there are outstanding issues on the appraisal. The good news is, you DO have options. The bad news is, you may not like them.

1. You can refuse to make the repairs and try for another contract, however, the appraisal could be attached to the house for a year. This means that if the next buyer is also getting a loan, that same appraisal will be used and those repairs will still have to be made.
2. Hold out for a cash buyer. Cash buyers rarely get appraisals done, however, they often offer less than asking. The cost of the repairs will probably come out of your bottom line anyway.
3. Arrange to pay for the repairs from your proceeds after closing. Some vendors will wait until closing for payment. You may also be able to take advantage of an “escrow hold-back” - a topic for another day.

Your best bet is to take care of any major issues before the appraiser finds them. The buyer’s home inspection should alert you to problems you may not have been aware of. The right Realtor® can provide you with resources for repairs and maintenance.

You know the one! Call me today to find out how I can help you get your listing ready for a smooth closing.