Banks are typically very risk-averse, and one area many homebuyers often misunderstand is lender-required repairs. If you are obtaining a government-insured or FHA loan, an FHA appraisal is required, while conventional loans generally require a conventional appraisal. FHA appraisals tend to be stricter and may require repairs before the lender will approve the loan. In other words, the lender will not release funds until certain repairs are completed.
In most cases, sellers are willing to negotiate and work with buyers to address lender-required repairs. However, when purchasing a distressed or “as-is” property, it’s important to be aware of potential repair requirements before making an offer. During negotiations, a seller may agree to a dollar cap for lender-required repairs, but relying on estimates rather than actual repair bids can carry risks.
