FHA & VA Appraisal Repair Checklist

Common Repairs That Can Delay or Even Stop a Home Sale

Selling a home to a buyer using FHA or VA financing? Certain property conditions may need to be repaired before the lender will approve the loan.

This checklist highlights common issues that FHA and VA appraisers may flag during the appraisal process. Preparing for these items before the appraisal can help sellers reduce delays and keep a real estate transaction moving forward.

Important: FHA and VA appraisals are not full home inspections. The appraiser evaluates the property's market value and observes conditions that may affect its eligibility for financing. The lender determines which repairs or additional documentation are required.

1. Roof Damage or Leaks

Common issues include:

• Missing, damaged, or deteriorated shingles

• Evidence of active roof leaks

• Water stains or moisture intrusion

• Roof damage that prevents adequate protection from the elements

• A roof with insufficient remaining useful life

Seller tip: Address visible roof damage and active leaks before the appraisal. FHA generally requires further evaluation when a roof has less than two years of remaining physical life.

2. Foundation or Structural Problems

Common issues include:

• Significant foundation movement or settlement

• Large or widening cracks in walls or masonry

• Uneven floors associated with structural movement

• Damaged support beams or structural components

• Evidence of continuing movement or instability

Seller tip: Minor hairline cracks do not automatically require repairs. Significant concerns may require an evaluation by a qualified professional.

3. Peeling or Defective Paint

Common issues include:

• Peeling, chipping, or flaking exterior paint

• Deteriorated paint on siding, trim, porches, or outbuildings

• Exposed wood surfaces that are deteriorating

• Defective paint on older homes that may contain lead

Seller tip: Pay special attention to homes built before 1978. FHA and VA have specific requirements for defective paint and potential lead-based paint hazards.

4. Unsafe Stairs, Decks, and Railings

Common issues include:

• Loose or missing handrails where needed for safety

• Broken or unstable steps

• Rotten deck boards

• Unsafe porches or balconies

• Damaged elevated walking surfaces

Seller tip: Repair obvious safety hazards before the appraisal. Not every missing handrail or minor deck defect automatically requires repair.

5. Electrical Hazards

Common issues include:

• Exposed or damaged wiring

• Open electrical junction boxes

• Missing electrical panel covers

• Obvious unsafe electrical conditions

• Electrical defects that present a safety concern

Seller tip: Have a qualified electrician correct electrical hazards. Appraisers generally do not perform a complete electrical inspection.

6. Plumbing Leaks and Water Supply Problems

Common issues include:

• Active leaks under sinks or around plumbing fixtures

• Water supply that is not functioning properly

• Lack of required hot or cold running water

• Sewage backup or evidence of septic system failure

• Water heater defects or missing required safety components

Seller tip: Check plumbing fixtures, repair active leaks, and confirm that required utilities are functioning. The water heater's temperature-and-pressure relief valve and discharge piping are important FHA appraisal items.

7. Heating and Mechanical Systems

Common issues include:

• Missing or nonfunctional required heating

• Unsafe or visibly defective HVAC equipment

• Mechanical equipment with significant defects

• Nonoperational installed air conditioning under applicable VA requirements

Seller tip: Confirm that required heating is operational. Under current VA guidance, installed air conditioning must also be operational.

8. Broken Windows, Doors, and Exterior Openings

Common issues include:

• Broken glass that presents a safety hazard

• Exterior doors that do not secure the home properly

• Damaged openings allowing water intrusion

• Deteriorated window or door frames

Seller tip: Repair broken glass, address security concerns, and correct significant damage that exposes the home to the elements.

9. Drainage and Moisture Problems

Common issues include:

• Water pooling near the foundation

• Poor grading that directs water toward the home

• Significant moisture intrusion

• Evidence of ongoing water damage

• Conditions contributing to structural deterioration

Seller tip: Correct obvious drainage problems and address active moisture issues before they lead to more serious damage.

10. Termites, Wood Rot, and Pest Damage

Common issues include:

• Visible termite activity or evidence of infestation

• Rotted structural wood

• Deteriorated framing or support components

• Moisture-related wood decay

Seller tip: Visible evidence may require further evaluation, treatment, or repairs depending on the condition and applicable loan requirements.

Additional Items That May Be Flagged

Other property conditions worth checking before the appraisal include:

• Water and sewer: Required utilities are available and functioning as applicable.

• Well or septic system: No obvious evidence of failure or unsafe conditions.

• Attic and crawl space: No significant visible moisture, deterioration, or hazards.

• Exterior siding and trim: No significant damage exposing the structure to the elements.

• Fire and safety hazards: No apparent conditions that threaten occupant safety.

• Property access: Safe access to the home and relevant living areas.

• Garage and outbuildings: Address significant structural, safety, or applicable defective-paint concerns.

• Environmental hazards: Investigate conditions that may threaten health, safety, or property eligibility.

Not every item automatically results in a required repair. The property's condition and the applicable loan requirements determine what must be addressed.

FHA vs. VA Appraisal Requirements

FHA Loans

FHA appraisals evaluate whether a property meets the program's Minimum Property Requirements. The home must meet applicable standards for safety, soundness, and security.

Common concerns include roof condition, structural problems, defective paint, water intrusion, utilities, and safety hazards.

VA Loans

VA appraisals evaluate whether the property meets the VA's Minimum Property Requirements (MPRs). The home must meet applicable standards for safety, structural soundness, and sanitation.

Common concerns include roof condition, structural integrity, safe access, functioning utilities, heating, and other conditions affecting the property's suitability.

Cosmetic defects: Minor cosmetic issues and ordinary wear generally do not require repairs by themselves. However, a condition that affects safety, structural integrity, sanitation, or another applicable lending requirement may need to be corrected.

Seller's Pre-Appraisal Checklist for FHA and VA buyers

Before the appraiser visits, consider checking the following items:

☐ Check the roof for visible damage or leaks.

☐ Repair active plumbing leaks.

☐ Confirm required utilities are turned on and functioning.

☐ Address obvious electrical hazards.

☐ Confirm the required heating system works.

☐ Check installed air conditioning for VA transactions.

☐ Repair unsafe stairs, railings, and walking surfaces.

☐ Address defective paint where required.

☐ Resolve significant moisture or drainage issues.

☐ Check for visible wood rot or termite damage.

☐ Confirm the water heater has required safety components.

☐ Provide safe access to the home and relevant areas.

Completing this checklist does not guarantee that a property will pass appraisal, but it can help identify common issues before they cause delays.

Frequently Asked Questions

Does every FHA or VA appraisal require repairs?

No. Many homes meet the applicable requirements without repairs. The appraiser's observations, the property condition, and the lender's requirements determine whether additional work is necessary.

Are FHA and VA appraisals the same as home inspections?

No. An appraisal is not a comprehensive inspection of every home system. Buyers should consider obtaining an independent home inspection.

Can cosmetic issues cause an appraisal problem?

Ordinary wear and minor cosmetic defects generally do not require repairs on their own. Defects involving safety, structural soundness, sanitation, or specific program requirements may need to be addressed.

Who determines which repairs are required?

The appraiser reports relevant property conditions, and the lender determines the conditions that must be satisfied for the loan to proceed.

Can repairs delay closing?

Yes. If required repairs, documentation, or a follow-up appraisal are necessary, the transaction may take longer. Addressing obvious issues early can help reduce avoidable delays.

Preparing to Sell Your Home?

Whether you're selling a home you've lived in for decades or preparing an inherited property for the market, understanding common FHA and VA appraisal requirements can help you plan ahead.

We can help you evaluate the home's condition, discuss repairs that may improve marketability, develop a pricing strategy, and coordinate with the appropriate professionals throughout the selling process.

Conventional Loan Appraisal Repair Checklist

Common Repairs That May Be Required Before Closing

Conventional loans are often more flexible than FHA and VA loans when it comes to a home's condition. However, a conventional lender may still require repairs if the property's condition affects safety, structural integrity, soundness, or eligibility for financing.

This guide explains common property conditions that conventional loan appraisers may flag and what sellers can do to prepare for the appraisal.

Important: Not every defect requires a repair. The appraiser reports relevant property conditions, and the lender determines whether repairs, additional inspections, or other documentation are necessary.

1. Roof Damage or Leaks

Common issues include:

• Active roof leaks

• Missing, damaged, or severely deteriorated shingles

• Water intrusion or significant roof deterioration

• Roof damage that threatens the home's interior or structure

Seller tip: Address active leaks and significant roof damage before the appraisal. Minor wear does not automatically require replacement of the entire roof.

2. Foundation or Structural Problems

Common issues include:

• Significant foundation settlement

• Severe or widening cracks in walls or foundations

• Structural movement or instability

• Damaged support beams or load-bearing components

• Evidence of continuing structural deterioration

Seller tip: Significant concerns may require a structural engineer's report or repairs by a qualified contractor. Minor hairline cracks do not automatically require repair.

3. Water Intrusion, Moisture, or Mold

Common issues include:

• Active plumbing or roof leaks

• Water entering through walls, windows, or the foundation

• Significant moisture damage

• Mold associated with unresolved water intrusion

• Conditions that threaten structural components

Seller tip: Identify and correct the source of water intrusion before addressing damaged materials. Significant or recurring moisture problems may require professional evaluation.

4. Electrical Hazards

Common issues include:

• Exposed or damaged wiring

• Open electrical junction boxes

• Missing electrical panel covers

• Unsafe electrical installations

• Electrical deficiencies that present a safety hazard

Seller tip: Have a qualified electrician address obvious hazards and verify that necessary repairs are completed safely.

5. Plumbing Problems

Common issues include:

• Significant or ongoing plumbing leaks

• Broken or nonfunctional plumbing fixtures

• Plumbing problems causing property damage

• Inadequate water service

• Sewer or septic problems affecting the property's use

Seller tip: Minor dripping faucets may be considered routine maintenance, while leaks that cause damage or affect the property's condition may require additional action.

6. Heating and Air Conditioning Problems

Common issues include:

• A required heating system that does not function properly

• Unsafe or significantly defective mechanical equipment

• Mechanical systems that threaten the property's condition or habitability

• Incomplete or defective installations

Seller tip: Confirm that installed systems operate as intended and arrange professional service if there are signs of significant defects.

7. Termites, Wood Rot, and Pest Damage

Common issues include:

• Evidence of wood-destroying insects

• Termite damage affecting structural components

• Rotted framing or deteriorated support wood

• Moisture-related wood deterioration

• Suspected pest damage requiring further investigation

Seller tip: The appraiser may recommend an inspection by a qualified professional. Significant structural damage may require repairs or documentation showing that the property is sound.

8. Unsafe Stairs, Decks, and Railings

Common issues include:

• Loose or unstable stairs

• Unsafe decks or balconies

• Damaged or deteriorated elevated walking surfaces

• Missing or unstable railings presenting a significant hazard

Seller tip: Address obvious safety concerns, especially where a defect could result in injury or indicate structural deterioration.

9. Broken Windows, Doors, and Exterior Damage

Common issues include:

• Significant damage to window or door frames

• Broken glass that presents a safety concern

• Extensive exterior wood rot

• Missing siding that exposes the structure to weather

• Damage that compromises the building envelope

Seller tip: Minor cosmetic defects may be acceptable, but significant deterioration or damage that threatens the structure may require repair.

10. Drainage and Site Conditions

Common issues include:

• Water collecting near the foundation

• Poor drainage contributing to water intrusion

• Significant erosion affecting the structure

• Damaged retaining walls that threaten structural stability

• Site conditions that create a substantial safety concern

Seller tip: Address drainage problems that contribute to foundation movement, water intrusion, or other significant property damage.

11. Incomplete Construction or Unpermitted Work

Common issues include:

• Incomplete renovations

• Unfinished rooms or construction areas

• Additions with questionable structural quality

• Work that appears unsafe or defective

• Improvements for which permits or inspections may be required

Seller tip: Unpermitted work does not automatically make a property ineligible for conventional financing. However, the appraiser or lender may require additional documentation, inspection, or correction if there are concerns about safety, quality, compliance, or structural integrity.

12. Other Significant Property Defects

Additional conditions that may require attention include:

• Damaged structural components

• Significant deterioration of exterior materials

• Hazardous environmental conditions

• Unsafe access to important areas of the home

• Defects that affect the home's habitability or marketability

The specific requirements depend on the severity of the condition, the applicable loan program, and the lender's underwriting decision.

What Usually Does NOT Require a Conventional Appraisal Repair?

Conventional financing often allows a home to be appraised in its current condition when the issues are minor and do not affect safety, soundness, or structural integrity.

Examples that may be acceptable include:

• Worn carpet or flooring

• Minor cosmetic wall damage

• Outdated fixtures or finishes

• Minor cracks in window glass

• Damaged window screens

• Worn countertops or cabinetry

• Missing cabinet hardware

• Minor dripping faucets that do not cause damage

• Ordinary wear and tear

Important: These are examples, not guarantees. The lender may require action if a seemingly minor condition creates a safety issue, causes damage, or conflicts with the applicable underwriting requirements.

Seller's Pre-Appraisal Checklist

Before the conventional appraiser visits, consider checking the following:

☐ Inspect the roof for leaks or significant damage.

☐ Address obvious foundation or structural concerns.

☐ Repair active plumbing and roof leaks.

☐ Check for significant moisture intrusion or mold.

☐ Correct obvious electrical hazards.

☐ Confirm that required mechanical systems function properly.

☐ Check for visible termite damage or wood rot.

☐ Repair unsafe decks, stairs, or railings.

☐ Address significant exterior deterioration.

☐ Correct drainage problems contributing to property damage.

☐ Review incomplete renovations or questionable construction.

☐ Provide safe access to the property and relevant areas.

This checklist can help identify potential concerns before the appraisal, but it cannot guarantee that the lender will not request additional repairs or documentation.

What Happens If the Conventional Appraiser Requires Repairs?

If the appraiser identifies a significant deficiency, several outcomes are possible.

1. The property is appraised as-is.

If the condition is minor and does not affect the property's safety, soundness, or structural integrity, the lender may allow the transaction to proceed without requiring repairs before closing.

2. The appraisal is made subject to repairs.

The appraiser may require specified repairs or alterations to be completed before the property can meet applicable requirements.

3. Additional professional inspection is required.

If the appraiser cannot determine the severity of a condition, the lender may require an evaluation by a qualified professional.

4. Repairs must be verified.

The lender may require photographs, invoices, inspection reports, a completion report, or other acceptable documentation before the loan can proceed or be delivered to the investor.

Whether repairs must be completed before closing depends on the lender's requirements and the circumstances of the transaction. Some eligible minor items may be handled differently, including through an approved escrow arrangement when permitted.

Conventional vs. FHA and VA Appraisals

Conventional loans generally provide more flexibility for minor property-condition issues than FHA or VA financing. However, conventional loans still have property eligibility standards.

• Conventional: Focuses on the property's overall condition, marketability, and structural integrity, with lender requirements based on the applicable underwriting rules.

• FHA: Applies FHA Minimum Property Requirements concerning safety, soundness, and security.

• VA: Applies VA Minimum Property Requirements concerning safety, structural soundness, and sanitation.

The actual requirements vary by property, loan program, lender, and appraisal findings.

Who Pays for Lender-Required Repairs When Selling a Home?

Understanding Seller and Buyer Responsibilities for Conventional, FHA, and VA Loans

When selling a home, a buyer's lender may require certain repairs before approving the mortgage. These repairs may involve the roof, foundation, electrical system, plumbing, safety hazards, or other property conditions.

One of the most common questions sellers ask is: Who is responsible for paying for lender-required repairs?

In most transactions, the seller often pays for repairs required to make the property eligible for the buyer's financing. However, there is no universal rule requiring the seller to pay. Responsibility depends on the purchase contract, negotiations between the parties, the type of repair, and the lender's requirements.

Who Typically Pays for Appraisal-Required Repairs?

The following examples illustrate common practices in residential real estate transactions.

Roof Leaks or Significant Roof Damage

The seller commonly pays to repair active leaks or significant roof damage that prevents the property from meeting applicable lending requirements.

Foundation or Structural Problems

Responsibility is often negotiated between the buyer and seller. Significant structural problems may require professional evaluation and repairs before the lender will approve the loan.

Electrical or Plumbing Safety Hazards

The seller often completes necessary repairs, particularly when the condition presents a safety concern or causes property damage. The parties may negotiate another arrangement if the lender permits it.

Peeling Paint or FHA/VA-Specific Requirements

The seller commonly addresses defective paint or other conditions that must be corrected to meet the applicable loan program's requirements.

Minor Cosmetic Issues

Minor cosmetic issues, such as worn carpet, outdated fixtures, or small cosmetic imperfections, generally do not require lender-mandated repairs by themselves. Buyers may accept these conditions as part of the purchase.

Repairs Discovered During the Buyer's Inspection

Inspection-related repairs are negotiable. The buyer may request repairs, a credit if permitted, a price adjustment, or accept the property as-is, subject to the contract and lender requirements.

Repairs Requested by the Buyer Rather Than the Lender

These are generally negotiable between the parties, unless the contract or applicable law provides otherwise.

Repairs Required by the Lender Before Closing

The seller often agrees to complete these repairs, but the buyer may sometimes assume responsibility if the seller agrees, the contract allows it, and the lender approves the arrangement.

Does It Matter Whether the Buyer Uses a Conventional, FHA, or VA Loan?

Conventional Loans

Conventional financing generally offers flexibility when negotiating property repairs. If the lender requires significant work before funding the loan, the seller may agree to complete the repairs, offer a credit when permitted, or negotiate another lender-approved solution.

Not every property defect requires repair. The lender's decision depends on the appraisal findings, property condition, and applicable underwriting requirements.

FHA Loans

FHA financing has Minimum Property Requirements intended to help ensure that the property meets applicable standards for safety, soundness, and security.

Sellers commonly pay for repairs necessary to meet these requirements. However, the buyer may sometimes agree to pay for repairs if the parties and lender permit the arrangement.

VA Loans

VA financing has Minimum Property Requirements intended to help ensure that the property is safe, structurally sound, and sanitary.

Sellers often complete repairs necessary to satisfy these requirements. In some cases, the buyer may assume responsibility for repairs, subject to the purchase contract and lender approval.

Important: FHA, VA, and conventional loan requirements differ. The buyer's lender must confirm what repairs are required and whether an alternative arrangement is acceptable.

Can the Buyer Pay for the Repairs Instead?

Yes, potentially. The buyer and seller can negotiate who will pay for repairs, but the arrangement must be compatible with the purchase contract and the lender's requirements.

Before agreeing to a repair arrangement, consider the following:

• The purchase contract must permit the agreed arrangement.

• The lender must approve the proposed solution when required.

• Repairs may need to be completed and verified before closing.

• A seller credit or price reduction does not automatically satisfy a lender-required repair.

• Some repairs must be physically completed before the loan can close.

• If the buyer is responsible for repairs before closing, the buyer must have the legal right and practical ability to complete the work.

A lender may allow certain alternatives, such as an approved repair escrow, in qualifying circumstances. However, this should never be assumed without confirmation.

What Happens If the Seller Refuses to Make the Repairs?

If the seller does not agree to complete lender-required repairs, several options may be available depending on the circumstances.

1. Renegotiate the Repair Agreement

The buyer and seller may negotiate who completes the work, how it will be paid for, and when it must be completed prior to the closing date.  If the buyer refuses to pay for the repairs, they are allowed to terminate the contract and recieve the earnest money refunded back to them.

2. Request an Alternative Approved by the Lender

The parties can ask whether a credit, repair escrow, or another arrangement is permitted. Approval is not guaranteed.

3. Determine Whether the Loan Can Proceed

The lender must determine whether the property meets the applicable requirements. The buyer should not assume the loan will close if required repairs remain outstanding.

4. Review the Purchase Contract

If the parties cannot reach an agreement, the buyer and seller should review the contract with their real estate professionals and, when appropriate, an attorney to determine their rights and obligations. Termination rights depend on the contract and applicable law.

Example: Is It Worth Making the Repair?

Suppose a home is under contract for $350,000, and the lender requires a $1,200 roof repair before closing.

The seller may decide that completing the repair is more economical than risking the loss of the buyer, paying additional carrying costs, and putting the home back on the market.

However, every situation is different. The parties should consider the cost of repairs, the buyer's financing timeline, alternative buyers, and the terms of the purchase contract before deciding how to proceed.

If a Buyer Backs Out Because of Lender-Required Repairs, Will the Next Buyer Have the Same Problem?

When selling a home, one of the most frustrating situations is having a buyer terminate the contract because their lender requires repairs before approving the loan. But does that mean every future buyer will face the same requirements?

The short answer is: Not necessarily. It depends on the condition of the property, the type of financing the next buyer uses, the appraisal findings, and the requirements of the new buyer's lender.

1. Will the Next Buyer's Lender Require the Same Repairs?

Not always. Different lenders, loan programs, appraisers, and underwriting circumstances can lead to different repair requirements.

For example, if a buyer using an FHA loan terminates because the appraiser identifies peeling paint, a damaged handrail, or a safety concern, a future buyer may encounter the same issue if it remains unresolved.

However, a buyer using conventional financing may have different property requirements, depending on the home's condition, the loan program, and the lender's guidelines.

Here are a few common scenarios:

Scenario 1: The Next Buyer Uses the Same Type of Loan

If the next buyer also uses FHA or VA financing, the same unresolved property condition may be flagged again. The exact result depends on the new appraisal and the lender's requirements.

Scenario 2: The Next Buyer Uses Conventional Financing

Conventional financing can be more flexible in some situations. A condition that prevents an FHA or VA loan from moving forward may not automatically prevent conventional financing.

However, conventional loans can still require repairs for safety, structural integrity, soundness, or other property eligibility concerns.

Scenario 3: The Next Buyer Pays Cash

A cash buyer generally does not need a mortgage appraisal for loan approval. This may eliminate lender-required repairs as a condition of financing, but it does not eliminate the need to consider the property's condition, inspections, insurance, local requirements, or other potential concerns.

2. Which Repairs Are Most Likely to Affect Future Buyers?

Some property conditions are more likely than others to cause problems with future financing.

Common examples include:

• Roof problems: Active leaks, significant deterioration, or a roof that does not adequately protect the home.

• Foundation or structural concerns: Visible structural damage or conditions that raise questions about the property's stability.

• Safety hazards: Missing handrails, unsafe stairs, exposed wiring, or other significant hazards.

• Electrical or plumbing problems: Unsafe systems, major defects, or conditions affecting basic functionality.

• Water intrusion or moisture damage: Active leaks, significant water damage, or related deterioration.

• Peeling or defective paint: Particularly relevant to certain FHA or VA requirements for homes built before 1978, where lead-based paint rules may apply.

• Wood-destroying insects or wood rot: Damage that affects structural components or the property's condition.

If a repair involves a serious safety, structural, or habitability concern, it may affect multiple types of financing—not just FHA or VA loans.

3. Does the First Appraisal Affect the Next Buyer?

It can.

If the first appraisal identifies required repairs, that report may contain information that is relevant to the property's condition. Whether the next lender can access or use the prior appraisal depends on the loan program, appraisal rules, lender procedures, and the circumstances of the new transaction.

For FHA and VA financing, specific appraisal portability and reuse rules may apply. A seller should not assume that terminating the first contract automatically eliminates the previous appraisal or its findings.

With conventional financing, the new lender may order a new appraisal or determine whether an existing appraisal can be used under applicable guidelines.

Important: A new buyer does not automatically receive a clean slate simply because the previous contract was terminated.

4. Should the Seller Make the Repairs Before Relisting?

In many cases, addressing legitimate safety, structural, or property-condition concerns before relisting can help reduce delays and expand the pool of potential buyers.

Before deciding what to repair, the seller should:

1. Obtain a copy of the previous appraisal or repair notice, if available.

2. Identify which items were specifically required by the lender.

3. Determine whether the issue is a lender requirement, an inspection concern, or a recommendation.

4. Obtain estimates from qualified contractors when appropriate.

5. Confirm whether permits or additional documentation are needed.

6. Consult the listing agent and, when appropriate, the next buyer's lender about likely requirements.

The seller may not need to complete every item mentioned in an inspection report. The key is to understand which issues affect financing, safety, property condition, or the seller's legal obligations.

5. Can the Seller Find a Buyer Who Does Not Need the Repairs?

Possibly, depending on the circumstances.

A seller may consider marketing the property to buyers using a different loan program or to cash buyers. However, changing the financing method does not make an unsafe or materially defective condition disappear.

Buyers may still request repairs, negotiate a price reduction, seek an inspection, or decide not to proceed. Insurance companies, local authorities, and applicable disclosure requirements may also affect the transaction.

The best strategy is to understand the specific issue before assuming that a different buyer will solve the problem.

6. What If the Seller Cannot Afford the Repairs?

If the seller cannot or does not want to complete the repairs, there may still be options. Depending on the property's condition and the applicable loan program, the seller and buyer may consider:

• Negotiating a different purchase price.

• Determining whether the buyer's lender permits an appropriate repair escrow or other approved arrangement.

• Marketing the property to buyers whose financing and plans fit the property's current condition.

• Obtaining contractor estimates to help evaluate the cost and feasibility of repairs.

• Reviewing the purchase contract with the real estate agent and, when needed, a qualified real estate attorney.

Repair escrows and seller concessions are not permitted in every situation and do not automatically satisfy a lender's repair requirements. The buyer's lender must approve any proposed arrangement.

7. What Should Sellers Do After a Buyer Terminates?

If a buyer backs out because of lender-required repairs, the seller should avoid immediately assuming that the next buyer will face the same outcome—or that the problem will disappear.

Instead, identify the exact reason the first transaction failed and develop a plan before accepting another offer.

A knowledgeable real estate agent can help the seller review the available documentation, evaluate potential buyer financing options, obtain repair estimates, and decide whether making repairs before relisting makes financial sense.

Frequently Asked Questions

Will every future buyer be required to make the same repairs?

No. Requirements depend on the property's condition, the buyer's financing, the appraisal, and the lender's guidelines. However, unresolved safety or structural issues may affect multiple buyers.

If the first buyer terminates, does the appraisal disappear?

Not necessarily. Appraisal reuse and transfer rules vary by loan program and lender. FHA and VA appraisals may be subject to specific requirements, so sellers should not assume a new contract automatically means a new appraisal.  Typically lender required repairs that are flagged from the first buyer will transfer to future FHA and VA buyers for approximately the following six months.

Can a conventional buyer purchase a home that an FHA buyer could not?

Sometimes. Conventional financing may allow certain conditions that FHA financing would not, but conventional lenders also have property eligibility and safety requirements.

Would a cash buyer avoid lender-required repairs?

Generally, a cash purchase does not involve mortgage-related repair requirements. However, the buyer may still request repairs, and other safety, insurance, legal, or property-condition concerns may remain.

Is it better to repair the home before putting it back on the market?

It depends on the nature and cost of the repairs, the property's market value, and the likely buyer pool. Addressing major concerns may prevent repeated contract problems, but the seller should evaluate the costs and options first.

Recommendations for Home Sellers

When a lender identifies required repairs, taking the following steps can help keep the transaction organized:

• Obtain the lender's repair requirements in writing.

• Determine whether the condition must be corrected before closing.

• Obtain estimates from qualified contractors.

• Confirm who is responsible for the repairs under the contract.

• Ask the lender whether a credit, escrow, or alternative arrangement is allowed.

• Keep invoices, receipts, photographs, and other repair documentation.

• Confirm whether a follow-up appraisal or inspection is required.

Addressing repair issues promptly can reduce avoidable delays and help the parties make informed decisions.

Contact us today to discuss your home's sale and prepare for a smoother transaction.

Important Disclaimer

This information is provided for general educational purposes only and is not a guarantee of loan approval or a substitute for current FHA or VA requirements. Specific repair requirements depend on the property, the appraisal findings, current program guidance, and the lender's underwriting decision.

For official guidance, visit the U.S. Department of Housing and Urban Development (HUD) at HUD.gov and the U.S. Department of Veterans Affairs (VA) at VA.gov.