Why Buyer Asks Seller to Put Money in Escrow

[Andrew Yu]

I'm currently selling a property FSBO. After inspection, I got a list of things needing repair. Buyer's agent without asking me whether I wanted to do repairs myself or do price reduction. She just sent me a repair addendum with this exact wording, "Buyers requests that Seller to escrow $5000 at closing for all repairs listed in attached Exhibit A to be held at Pulaski County Title".

This really confuses me. I have never heard of such way to handle repairs before. My plan is to just hire a contractor to do all the repairs in Exhibit A. I saw the list. There's no way it would cost anywhere near $5000. My question is why would Buyer do this? What's his incentive? Can he even use that $5000 in escrow for repairs?

[Bill B.]

Sounds like they had no intent of paying your price. Just wanted to lock up the property so others couldn’t buy it and you might feel like “it’s sold” and being willing to make any concessions to get the sale. 

If you need to sell and have no other buyers, what can you do but take it. If you want to sell but have other buyers or don’t need to, counter with $1,000 or you’ll do the repairs. When calculating the repairs you need to do, cross off anything that was obvious at walk through and anything that adds value or makes the property worth more. They want to pay the beat up price, not the fixed up price. If you don’t need to sell, I personally would respond, offer denied, sale cancelled and return their earnest money. 

When they added the repair addendum they basically said we no longer like the deal we made and it’s cancelled, here’s our new deal. Which means you are no longer held by the old deal and can say no thank you. If you don’t want to be as drastic as me, leave it listed where ever you got this attention and just let them stew for a few days and see if you get another offer. If you do, cancel their offer and take the new one, if not, consider your options.