Cash Bonus

You just got an offer on your Hinsdale property listing.  This single family home was only on the market for six weeks but your sellers needed a quick sale and you complied, pricing the home just right.  Naturally, the buyers order an inspection to make sure your listing is in top-top shape.  But it’s not exactly in tip-top shape; at least according to the inspection.

The three-bed, three bath home was listed as a “fixer upper” and the buyers knew that going in, but your $500,000 asking price took that into consideration. Not bad for a home that size in Hinsdale.  But the inspection pulled up a few little items including;

  • Garbage disposal not working
  • Railing on front porch loose
  • Water spots on ceiling; roof needs repair

The first two items are easy to fix.  You get a new disposal, install it and provide the receipt to the buyers.  You get your handyman to fix the loose railing on the front porch and get a copy of the work order and invoice marked “paid.”

But the roof does indeed need replacing to the tune of about $5,000.  But your sellers have to move fast and they don’t want to wait for the roof to be fixed and the buyers want the roof fixed or the whole deal is off.  The sellers suggest closing on the house but giving the buyers a $5,000 “roof allowance” at the closing table.

A roof allowance, or any repair allowance for that matter, can provide an additional set of problems.  First, if the roof needs repair, the lender won’t make a loan until the roof is repaired and inspected.  Second, the sellers can’t give cash to the buyer at closing to go fix the roof.  Sellers aren’t allowed to give cash to buyers.  Closing cost credit? Sure.  Reduction in sales price?  You bet.  But a repair allowance will be treated as cash to the buyers, knocking a loan approval off its tracks.

In this scenario, your Hinsdale home’s roof will have to be repaired before the closing can take place and any other seller concessions must be made known to the lender.  You can fix the roof or fix the railing but your sellers can’t give the buyers a cash bonus at the settlement table.


Make a change to work with me for your buyer’s mortgage needs!


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