By Randy Richardson, Broker Associate, The 4th Right Team

Quick Answer: After a home inspection on the Mississippi Gulf Coast, fix the items that stand between the buyer and closing, and credit or price-adjust the rest. Anything the buyer's lender or insurance carrier requires, like an aging roof, a safety issue or active termites, usually has to be handled before closing, so a repair is often the only option that works. For cosmetic or larger items the buyer plans to redo anyway, a credit or price cut is usually faster and cleaner. Just know that seller credits have lender limits, 3% of the price on a conventional loan with less than 10% down, and they generally go toward closing costs, not cash for repairs.

What are my options after the buyer's inspection?

There are three, and each one moves money and risk differently.

You can fix it. You hire the work done before closing and show the buyer proof. You control the cost, but the buyer has to trust the quality.

You can give a credit. You agree to pay part of the buyer's closing costs, and the buyer handles the repair after closing with their own contractor. The buyer controls the quality, but the credit has rules.

Or you can lower the price. The buyer borrows a little less and keeps their cash for the repair. It's simple, but it's permanent. The lower price becomes a comp for your neighbors. It also shows up in your net sheet the same way a credit would.

When should a seller fix the problem instead of giving a credit?

When the deal can't close without it. On the Coast, that comes up more than sellers expect.

Insurance is the big one. A buyer can't close without a bound policy, and carriers look hard at the roof. If the inspection flags a roof at the end of its life, the buyer's carrier may refuse to write the house until it's fixed. A credit doesn't solve that, because the money doesn't arrive until after closing. That's why roof age can make or break a sale here. If you're replacing it anyway, check whether the Strengthen Mississippi Homes program can help with a FORTIFIED roof.

The lender is the second. FHA and VA appraisers flag health and safety issues, and the loan can be made subject to repairs that have to be finished before closing. Active termites are a third. Termite letters are a standard part of Coast closings, and active infestation usually has to be treated before the deal closes.

Fixing also makes sense when the repair is small, cheap and quick. A $300 plumbing fix is easier to just do than to negotiate.

When is a repair credit the better choice?

When the buyer wants control, or when the fix is really an upgrade.

If the buyer is planning to redo the kitchen, there's no point in you patching the counters. If the HVAC works but is near the end of its life, a credit lets the buyer pick the new system. And if timing is tight, a credit avoids scrambling for a contractor, which can be hard to do on the Coast in the weeks after a named storm.

A credit also takes you out of the quality question. If you fix something and the buyer doesn't like the work, you're back at the negotiating table. If you give a credit, the buyer owns the result. Compare the options with other seller concessions already in the deal before you decide.

How much can a seller credit a buyer for repairs?

Less than most people think, and it depends on the buyer's loan. Fannie Mae limits what it calls interested party contributions, which includes seller credits, based on how much the buyer is putting down.

For a primary residence or second home, the limit is 3% of the price when the buyer puts down less than 10%, 6% when they put down 10% to 25%, and 9% when they put down more than 25%. Investment property buyers are capped at 2%. FHA and VA loans have their own limits, so check with the buyer's lender.

Two more rules matter. Seller credits can't be used for the buyer's down payment or reserves, so they go toward closing costs and prepaid items, not a check for repairs. And anything over the limit is treated as a price reduction, which the lender uses to recalculate the loan.

Here's how that plays out. On a $250,000 home with 5% down, the 3% cap is $7,500. If you already agreed to $5,000 in closing cost help, only $2,500 more can be added as a credit. A $6,000 roof repair would have to be a repair or a price change, not a credit. Your buyer's lender can confirm exactly what fits.

If I fix it, how do I make sure the repair holds up?

Treat the repair like it'll be inspected again, because it often will be.

Use licensed, insured contractors. In Mississippi, residential remodeling and roofing work over $10,000 requires a state license from the State Board of Contractors, and you can look up a contractor on the board's site. Pull permits when the work calls for them.

Get written invoices that describe exactly what was done, and give copies to the buyer. Offer a re-inspection of the repaired items. And keep the paperwork, because repairs you make don't erase the history. If you sell again someday, what you know about past problems still belongs on the disclosure. That holds even when a home sells as is.

How do I avoid a long repair negotiation in the first place?

Find the problems before the buyer does. A pre-listing inspection lets you fix the must-do items on your own schedule, price for the rest, and show buyers the report up front.

That matters most for insurability. If you know the roof, the electrical panel or the termite history will be a problem, handling it before you list keeps it from becoming a deal-breaker in the middle of a contract.

By the Numbers

Fannie Mae seller credit limit, less than 10% down: 3% of price
Limit with 10% to 25% down: 6%
Limit with more than 25% down: 9%
Limit on investment property: 2%
Example 3% cap on a $250,000 home: $7,500
Mississippi license threshold for residential remodeling and roofing: more than $10,000

The Bottom Line

Fix what stands between the buyer and closing, especially anything the insurance carrier or lender will require. Credit or price-adjust the items the buyer wants to handle their own way, and check the credit limits before you agree to a number. Then compare every option on what you actually walk away with.

If you're getting ready to sell, start with a home value evaluation. Then I'll walk you through how I prepare a Coast home so the inspection doesn't derail the deal.

Frequently Asked Questions

Is it better to fix repairs or give a credit when selling a house?
Fix anything the buyer's lender or insurance carrier requires to close, like a failing roof or active termites. For cosmetic items or things the buyer plans to replace, a credit or price reduction is usually simpler.

How much can a seller give a buyer in closing cost credits?
On a conventional loan for a primary residence, Fannie Mae caps seller contributions at 3% of the price with less than 10% down, 6% with 10% to 25% down, and 9% with more than 25% down. FHA and VA have their own limits.

Can a seller credit be paid to the buyer in cash for repairs?
Generally no. Seller credits go toward the buyer's closing costs and prepaid items, not the down payment or cash back. Anything over the limit is treated as a price reduction.

Does a contractor need a license for repairs in Mississippi?
For residential remodeling or roofing work over $10,000, yes. You can look up a contractor's license with the Mississippi State Board of Contractors.

Sources

Seller credit limits, exclusions and excess treated as a sales concession: Fannie Mae Selling Guide B3-4.1-02, Interested Party Contributions
Mississippi residential remodeler threshold: Mississippi Senate Bill 3012 (2000), residential builder and remodeler licensing
Remodeling and roofing license over $10,000 and contractor lookup: iContractor, Mississippi contractor licensing summary, citing the Mississippi State Board of Contractors
FHA repairs required before closing: HUD, FHA appraisal conditions and minimum property requirements

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About the Author
Randy Richardson is a Broker Associate and Team Leader of The 4th Right Team at CENTURY 21 J. Carter & Company. He serves buyers and sellers across the Mississippi Gulf Coast.

Randy Richardson | Broker Associate
The 4th Right Team | Century 21 J. Carter & Company
📞 Office: (228) 731-3881 | Cell: (228) 547-9999
📧 realtorrandyrichardson@gmail.com
🌐 www.The4thRightTeam.com

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