How to buy a house in need of repairs

Many times you find a house that you want at the right price, but it may need some repairs. Depending on what needs to be done you can use a couple options to get the repairs completed.

We can categorize repairs into two groups: those done before closing by the seller and those done after closing by the buyer (hopefully along with some sort of seller credit). The first option is pretty straighforward: after the inspection, give the seller the list of items needing repair then make sure they do them before closing. The one catch is that the seller has to agree to do them.

Many times a seller refuses to do repairs or it's in the buyers best interest to do the repairs themselves. An example of the second case would be repainting the house. A buyer would be better off doing it after closing so they could pick their own colors.

So in the case of the buyer performing repairs after closing they would typically pay for them out of pocket. But what if they don't have the money to pay for the closing costs and downpayment on the house and for the repairs? A seller is not allowed to give a buyer cash back at closing, but they are allowed to pay for a buyer's closing costs. So they can pay for a buyer's closing costs and the buyer can use the money they had set aside for closing costs towards repairs.

Hope this helps! Happy house hunting!