Cleveland Point of Sale Escrow

[Justin May]

I'm having a hard time finding an answer to this question - if a thread already exists, please point me in the right direction!

I'm trying to wrap my head around the point of sale violation process and how repair funds are escrowed (word?) for the buyer. Example: I buy a house that needs repainted to pass - buyer assumes repair - buyer escrows 125-150% of the $5,000 (made-up number) repair cost - DOES THE BUYER NEED TO THEN FUND THE REPAIR OUT OF POCKET while the escrow funds sit untouched? 

Also, can any of this roll into an FHA 203K loan?

Has anyone negotiated (successful or unsuccessful) to pay asking or over asking for the seller to assume the repairs if the buyer is short on liquid cash to be tied up in these deals?