Inspection and Repairs
How the request for repair works in an as is sale, the differences among repairs, credits and price reductions, and where lender limits come in.
Inspection week is where a Los Angeles purchase gets real. The reports arrive, the house acquires a list of flaws, and the buyer faces the central negotiation of most escrows: what, if anything, the seller will do about them. California runs this negotiation through a deceptively simple document, the request for repair, inside a contract that sells the property as is. Understanding how those two things fit together, and the three ways the negotiation can resolve, is worth real money on both sides.
The standard purchase agreement sells the home in its present physical condition. The seller's obligations are to disclose what they know, maintain the property through closing, and complete only the repairs they have specifically agreed to. Within the investigation contingency, the buyer may deliver a written request asking the seller to make repairs or take other action, on the request for repair form. And here is the sentence that frames everything: the seller has no obligation to agree, or even to respond.
So why does the negotiation work at all? Leverage, running in both directions. The buyer's leverage is the live investigation contingency: until it is removed, the buyer can cancel over the condition of the property and generally recover the deposit, so a seller who stonewalls a reasonable request risks losing the escrow entirely. The seller's quieter incentive is disclosure: once a buyer's inspection report is in the seller's hands, its findings are things the seller now knows, and a seller who loses this buyer must disclose those findings to the next one. An inspection report does not just inform a negotiation; it permanently changes what the listing must say about itself. Both sides understanding this is why most repair requests settle.
The response travels on a companion form built for the volley: the seller's response and the buyer's reply share one document, and the seller's agreement extends only to the items actually marked. If the resolution includes the buyer removing the investigation contingency, that removal still must be documented in writing, on the reply or on the removal form itself, the same active removal rule explained in our contingency removal guide.
Every repair negotiation lands on one of three structures, and they are not interchangeable.
Seller performed repairs put the work on the seller's schedule before closing. The contract holds the work to a real standard: it must comply with law, including permits where required, be done in a good and skillful manner with materials comparable to existing, and be finished before the buyer's final verification of condition. The seller must obtain invoices and paid receipts, prepare a written statement of what was repaired and when, and deliver copies to the buyer before that final verification. The weakness of this structure is the obvious one: the person paying for the work is not the person who will live with it, and rushed escrow timing is not where craftsmanship thrives.
A credit converts the repair list into money at closing. The standard contract routes credits through the seller credit provisions, and two rules of that plumbing matter. Every credit must be disclosed to the buyer's lender. And if the lender allows less than the agreed credit, the contract reduces the credit to the lender allowed amount, with no automatic price adjustment making up the difference, so a credit written without checking the lender's ceiling can quietly shrink. Lenders cap what interested parties may contribute, the caps vary by loan program and down payment, generally landing between two and nine percent on conventional loans with FHA and VA under their own rules, and credits cannot exceed the buyer's actual closing costs and prepaid items; there is no cash back at the closing table. The caps change, so the buyer's lender has the final word, early.
A price reduction avoids lender contribution caps entirely, since it is not a contribution, but it helps the buyer least at the moment of truth: it lowers the loan and the payment slightly, while the buyer still fronts the full repair cost in cash after closing. On larger transactions, sellers near a transfer tax threshold have their own reason to care about the form of the concession; a seller close to a Measure ULA boundary should read our guide to the measure before choosing between a credit and a cut.
Most buyers in most escrows are best served by the credit, because it lets them choose their own contractor, on their own timeline, with a warranty running to them. The craft is in the ask: credits supported by licensed contractor bids read as facts and get paid; round numbers pulled from the air read as a second price negotiation and get fought.
A few days before closing, by default five, the buyer has the right to a final verification of the property's condition. The contract is explicit that this walkthrough is not a contingency of the sale; it exists to confirm the property is in substantially the same condition as at acceptance, that agreed repairs were completed, and that the seller has performed their obligations. Bring the repair statement and receipts the seller was required to deliver, and where the stakes justify it, bring the inspector back to verify the agreed work. Problems found at the walkthrough are resolved through escrow, by holdbacks, last credits or delayed closing, which is messy enough that verifying repairs the week before is always the better path. The closing mechanics live in our escrow guide.
Los Angeles negotiations still speak a dialect inherited from older contracts: Section 1 and Section 2. The terms come from the standardized wood destroying organism report, where Section 1 covers items with visible evidence of active infestation, infection or resulting damage, and Section 2 covers conditions likely to lead to infestation that show no visible evidence yet. The old pest addendum that automatically assigned this work disappeared from the standard contract years ago; today the contract's cost allocation section decides only who pays for the report itself, and the work is negotiated like any other repair, through the request for repair or in the offer. The phrase "seller to pay Section 1 clearance" survives as pure custom, common in Southern California and binding only if written into the deal. On hillside properties, where drainage, retaining walls and decks drive both inspection findings and repair budgets, the stakes of this negotiation scale up quickly; our hillside guide covers what inspections should target in those settings.
Reading inspection reports, pricing the fixes and structuring the ask is week one work in every escrow I run, and it is where a transaction is quietly won or lost.
This guide is general information about standard California forms and practice, not legal advice; forms are revised regularly and lender rules shift, so rely on your agent, your inspector and your lender on the deal in front of you.
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