Can The Seller Tell Me How To Use The Closing Cost Credit?

Perhaps that's a trick question.  Let's back up.  Your home is listed for sale in the MLS.  You have agreed to let your agent advertise you're willingness to offer either a dollar amount or a percentage of the sales price as closing cost credit.  But and this is the big but, you specify the only thing the closing cost credit can be used for is to do a specific improvement to the property.

In Virginia our contract states seller subsidy can be used by the purchaser against loan charges and pre-paid items and other charges as agreed upon by the lender.  The contract doesn't say seller subsidy is to be used for a home improvement dictated by the seller.  In today's lending environment where every T & C on a contract is scrutinized by an underwriter the chances are this subsidy is going to raise a red flag.

If your home needs $15,000 worth of work the buyer is going to think it needs even more.  Why even go there?.  If your home needs an improvement with a significant price tag attached you are better off to either 1) lower the price to make up for the deficiency you've identified or 2) go ahead and get it fixed yourself.  

Buyers in today's market in Northern Virginia are savvy  They won't write an offer on an overpriced home or one with obvious condition issues not already accounted for in the price.  Before you consider a "seller subsidy" make sure you don't raise a flag that makes a buyer walk away from your home without giving it full consideration.