Seller Credits on a Manufactured Home Purchase: Questions Before You Negotiate
A seller can help a buyer in three different ways: lower the price, make a repair, or give a credit at closing toward the buyer’s costs. They look similar in a negotiation and do different things in the loan. Before you ask for any of them, ask your lender two questions: does my program allow a seller credit, and what may it cover. The answer decides which of the three you should be asking for.
How the costs a credit can offset are built up is in closing costs beyond the down payment. This article is about the forms a seller’s help can take.
Three concessions that are not interchangeable
Price reduction, repair and closing credit compared
| Price reduction | Repair by the seller | Seller credit at closing | |
|---|---|---|---|
| What changes | The price and the loan amount | The home | The cash you bring to closing |
| What stays the same | Your cash to close, mostly | The price and the loan | The price and the loan |
| Who does the work | Nobody | The seller, before closing | Nobody; you fix it later if it was for a repair |
| Where it appears | The purchase agreement | A repair addendum and receipts | A credit line on the settlement statement |
| What limits it | The appraised value | Time, and who inspects the work | The program’s rules on whether and how much |
A price reduction helps a buyer whose constraint is the monthly payment: a smaller loan means less interest over the loan. A credit helps a buyer whose constraint is cash at closing. A repair helps when the problem is the home itself and the seller is better placed to fix it. Knowing which constraint is yours is most of the negotiation.
Questions for your lender before you negotiate
The answers are specific to the program, the home and the loan, and they change, so get them for your file rather than relying on what a friend was told. No limits or percentages are given here because none apply to every case.
Why a credit should be negotiated against the real price
A tempting arrangement is to raise the price and have the seller give the difference back as a credit, so the buyer’s costs are financed inside the loan. It can fail at the value review. The loan is based on the supported value of the home, not the price, and a price lifted to make room for a credit can land above what the appraiser supports.
What happens then is covered in what if the home appraises below the price. Negotiate the credit as a credit, against the price the home is actually worth.
When the concession is really about a repair
The inspection is where most concessions begin: the inspector finds something, and the buyer asks the seller to do something about it. Three paths follow.
- The seller repairs it before closing. You get the work done by someone with a stake in finishing; you want to see receipts and, where a permit is required, the permit. Agree who inspects the work and by when.
- The seller credits or reduces the price instead. You take on the repair after closing. Get a contractor’s estimate first so the amount reflects the work.
- The lender requires the repair before funding. Some items affect whether the home can be financed at all, such as a condition that makes the home unsafe or unfinishable. Those cannot be traded for a credit; the work has to be done. Ask your specialist which kind of item you have.
The condition report that starts this process, and how it differs from the value review, is in inspection versus appraisal.
Put it in the agreement, and check the statement
Whatever you agree, it belongs in the purchase agreement or a signed addendum, in the exact form it will take: a new price, a described repair with a deadline, or a credit in a stated amount toward stated costs. Escrow builds the settlement statement from the agreement, and a concession that exists only in a text message does not reach the statement.
At signing, find the credit on the statement and confirm the amount; find the new price if the price changed; and find the receipts if a repair was promised. This is general information, not legal advice; the agreement itself, and a licensed professional if it is unclear, decide what you have. All financing is subject to credit approval, and program rules on concessions change.
