Buyers leave money on the table when they misread inspection reports

The form you use to ask a Texas seller for repairs changed on July 1, 2026. It is TREC No. 39-11, the Amendment to Contract, and it carries ten checkboxes. Three of them are three completely different ways to ask a seller for relief after an inspection, and which one you check decides who hires the contractor, what your lender does to your loan, and whether you walk away from the closing table with anything at all. Most buyers never see the form. They just tell their agent “ask for five grand” and hope.

TREC publishes the effective date on its own form page, and for both the Amendment (39-11) and the One to Four Family Residential Contract (20-19) it reads 07/01/2026. So if you are buying in Central Texas this fall, the paper underneath your inspection repair negotiation is less than three months old.

And look, I have been doing this since 2009, and the honest thing to say is that I got this wrong for years. Early on I treated the repair ask as a vibe. You read the report, you feel a number, you send the number. Then I watched a credit get cut in half at the closing table because of a rule that had nothing to do with the seller, the house, or the inspector, and I decided I should probably go read the actual forms. (I did. All twelve pages of the contract. It is not a fun weekend but it has paid for itself about forty times over.)

The four doors, and the box each one goes in

You have four moves after an inspection. Ask the seller to fix it. Ask for money toward your closing costs. Ask for a lower price. Or leave.

They are not interchangeable, and this is where the money leaks out. Three of the four ride on the Amendment, but on three different boxes, and each box drags in a different paragraph of the contract behind it.

One thing before the table, because it stops people cold. Almost every resale contract in Texas gets written As Is, and buyers hear that and assume the conversation is over. It is not. Paragraph 7D says that agreeing to take the property As Is “does not preclude Buyer from inspecting the Property under Paragraph 7A, from negotiating repairs or treatments in a subsequent amendment, or from terminating this contract during the Option Period, if any.” As Is means the seller made you no promises about the condition. It does not mean you cannot ask. Big difference right.

Read across the credit row one more time. That is the one that costs people money, and it is the one everybody defaults to, because “just give me the cash” sounds like the smart, flexible, grown-up ask.

It usually is. But not for the reason people think, and not without a ceiling.

Why a vague ask dies before it gets anywhere

Here is my favorite thing in the whole contract, and it is a parenthetical. Paragraph 7D(2), the box where a seller agrees to complete specific repairs, has this printed right underneath the blank line:

(Do not insert general phrases, such as “subject to inspections” that do not identify specific repairs and treatments.)

TREC put a warning label on the form. That should tell you how often this goes wrong.

And it is not a style note. An amendment is a contract. If the language says “seller to address plumbing issues noted in report,” you have not created an obligation anybody can perform, measure, or enforce. The seller’s agent reads it one way, you read it another, and the argument shows up three days before closing when the title company is trying to figure out what to disburse and to whom. Nobody at the title company was at your inspection. They cannot interpret your intent. They can only follow instructions that name a number or name a job.

So the ask has to be a thing a stranger could execute. “Replace the water heater TPR valve and extend the discharge pipe to within six inches of the floor” is a job. “Fix the water heater” is a wish.

Same on the money side. A credit is one number. Not “up to.” Not “approximately.” One number, in one box, in one paragraph. That is the whole reason the box exists.

The credit ceiling nobody tells buyers about

Ok, this is the section I actually wrote this post for.

When you ask for a credit, box (4) changes “the amount in Paragraph 12A(1)(b) of the contract.” Go read 12A(1)(b). It is an amount “to be applied to Buyer’s Expenses other than brokerage compensation or contributions under Paragraph 12B below.”

Applied to Buyer’s Expenses. Not applied to your roof. Not handed to you in a check.

Buyer’s Expenses are listed out in Paragraph 12A(2), and it is a long, boring list: appraisal fees, loan application fees, origination charges, credit reports, recording fees, the loan title policy, one-half of the escrow fee, underwriting fee, wire transfer fee, and all your prepaid items, meaning your insurance premium, your insurance reserves, and your property taxes. That is the bucket. The credit fills that bucket and it does not overflow into your pocket.

Which raises the obvious question. What if you ask for more than the bucket holds?

Your lender handles that, and both of the big rulebooks handle it the same way. Fannie Mae’s Selling Guide, in the section on interested party contributions, says financing concessions “must be equal to or less than the sum of the borrower’s closing costs,” and adds that “Any amount exceeding the borrower’s closing costs must be treated as a sales concession.” A sales concession gets deducted from the sales price, and then your loan-to-value gets recalculated off the lower number.

FHA is blunter, and it names the exact thing buyers ask for. HUD Handbook 4000.1 says contributions that exceed the borrower’s actual origination fees, closing costs, prepaid items and discount points are “an inducement to purchase.” Inducements “result in a dollar-for-dollar reduction to the purchase price when computing the Adjusted Value of the Property before applying the appropriate Loan-to-Value (LTV) percentage.” And sitting right there on HUD’s list of inducements, by name, is repair allowances.

So when you tell your agent to go get a ten thousand dollar repair allowance on an FHA loan, HUD’s own handbook says that is a price cut. You will get the price cut. You will not get ten thousand dollars.

The percentage caps are the part everyone quotes, and they matter less than you would think. Fannie caps concessions at 3% of the lower of sales price or appraised value if your loan-to-value is above 90%, 6% between 75.01% and 90%, 9% at 75% or less, and 2% on an investment property. FHA allows 6%. On a $525,000 house at 3%, that is $15,750, and almost no inspection ask gets near it. The cap that actually bites is the small one, your real closing costs, and no article ever mentions it because it is different for every buyer and you have to go ask your lender for the number.

That is the whole play, and it takes one phone call. Before you decide between a credit and a price cut, call your loan officer and ask what your total closing costs and prepaids come to. Whatever that number is, that is your credit ceiling. Ask for a dollar under it and you get every penny. Ask for a dollar over it and the overage quietly converts into something you did not choose. That is not that hard right, and yet I would guess most buyers in this market have never made that call.

(There are tax consequences to a lower purchase price too, since your basis follows the price. I am not your CPA and I am not going to pretend to be one. But it is worth a five minute call to yours.)

What asking for the repair actually buys you

Everybody tells buyers to take the money instead of the repair, and I mostly agree with that. Mostly. But the standard advice skips what Paragraph 7F obligates a seller to do, and it is more than people assume.

If the seller agrees to repairs, 7F says that unless the parties otherwise agree in writing, the seller completes them before the Closing Date and must “obtain any required permits.” The work has to be done by people “licensed to provide such repairs or treatments or, if no license is required by law, are commercially engaged in the trade.” The seller has to hand you documentation from the repair person showing both the scope of work and payment for the work completed. And at the seller’s expense, they have to arrange the transfer of any transferable warranties to you at closing.

Permits. Licensed trades. Proof of scope and proof of payment. A warranty in your name.

You do not get any of that with a credit. With a credit you get money and a to-do list.

So the honest rule I use is about permits and warranties, not about dollars. If the fix needs a permit or produces a warranty worth having, let the seller do it and make them show you the paper. Roof, water heater, panel, sewer line, HVAC replacement. If it is a Saturday and a trip to the hardware store, take the money and pick your own guy.

And if the seller misses the Closing Date on agreed repairs, 7F gives you a choice: exercise remedies under Paragraph 15, or extend the Closing Date up to 5 days. That extension is yours to elect, not theirs to demand. Worth knowing at 4:45 on a Thursday when somebody’s plumber has not shown up.

Price reduction, and the one time it is clearly right

Short section, because it is a short idea.

A price reduction is the cleanest instrument on the list and the weakest one for small stuff. Ten thousand off a $525,000 house moves your payment by a rounding error. It does not put a dollar in your pocket on closing day, and closing day is exactly when you are broke.

Where it wins is when the number is big enough to change what the house is worth. If the foundation needs real work, you are not negotiating a repair anymore, you are re-pricing an asset, and the appraiser is about to have an opinion about that anyway. Take the price down. Your loan follows it, your basis follows it, and you are not trying to squeeze a structural problem through a closing-cost bucket that was never big enough to hold it.

Walking away, and the clock you are actually on

The fourth door gets treated like failure. It is not, and Seth Godin makes the point in The Dip that quitting is a strategy in its own right as long as you quit for a reason and quit on time. The buyers I worry about are not the ones who walk. They are the ones who knew on day four and signed anyway.

Paragraph 5B is where the right lives. For nominal consideration and your agreement to pay the option fee within the time required, the seller grants you “the unrestricted right to terminate this contract by giving notice of termination to Seller within _____ days after the Effective Date of this contract (Option Period).” Unrestricted means unrestricted. You do not have to justify it, you do not have to cite the inspection, and the seller does not get a vote.

Three things about that clock and they all bite.

Notice has to be given by 5:00 p.m. local time on the date specified. Not close of business, not by end of day, 5:00 p.m. Paragraph 5E says time is of the essence and “strict compliance with the time for performance is required.”

If you terminate in time, the option fee is not refunded and your earnest money is. That is the trade, and it is a good trade. You bought the right to change your mind for the price of the option fee.

And 5D is the trap. If no dollar amount is stated as the option fee, or you fail to deliver it on time, you “shall not have the unrestricted right to terminate this contract under this paragraph 5.” The termination right is not free and it is not automatic. It is a thing you purchased, and you can fail to purchase it by being three days late with a small check.

The paper for leaving is not the Amendment. It is TREC form 38-8, Notice of Buyer’s Termination of Contract, and box (1) reads “The unrestricted right of Buyer to terminate the contract under Paragraph 5 of the contract.” The form also notes that it “is not an election of remedies” and that release of the earnest money is governed by the contract, which is a polite way of saying the notice stops the deal but the escrow release is its own conversation.

One more option most buyers do not know they have. Amendment box (7) lets you pay the seller an additional option fee to extend the unrestricted right to terminate to a new date. If the inspection turned up something that needs a structural engineer and the engineer cannot get out until next Tuesday, you do not have to guess and you do not have to walk. You can buy days. That is frequently the cheapest money in the entire transaction.

How big is your ask, really

Scale is the thing buyers lose track of, and it is why the same repair list produces a shrug in one county and a blown-up deal in another.

Here is the July 2026 picture across the five counties in our metro, out of our own MLS data. We report by county the way the board does, because there is no such thing as a meaningful blended metro median. The last column is there for a specific reason I will explain underneath it.

Now the last column, and I have to be careful here because it is easy to misread. Paragraph 7E is the only place in the entire twelve page contract where a dollar threshold gets attached to repairs. It says that if the cost of lender required repairs and treatments exceeds 5% of the Sales Price, you may terminate and your earnest money is refunded.

Lender required. Not inspector flagged. Your inspection report does not trigger 7E, ever. If your lender’s appraiser calls out a rotted soffit and demands it be fixed before funding, that is 7E. If your inspector writes up the same soffit, that is Paragraph 7D and a negotiation.

So use the column as a yardstick and nothing more. In Travis County, 5% of the median is $26,250. That is the scale at which the contract hands the buyer a unilateral exit over a repair bill. Almost every inspection ask I have ever written is a fraction of that. A $5,000 ask on the Travis median is 0.95% of the purchase price. That is a rounding error, and buyers routinely talk themselves out of asking for it.

Days on market is the other half. Travis sales closed at an average of 55 days on market in July and Caldwell sales at 81, and a seller almost three months in is a different person than a seller who took under two. I pull the listing history before I write a single line of an amendment, and honestly that number shapes the ask more than the repair costs do.

If you want the same context on a specific house, our Austin, Lakeway, and Bee Cave search pages carry the listing history, and I am happy to read it with you.

What I actually do with a report

This is the part of the job I am best at and it is also the part nobody watches, so let me show you the order I work in.

First I sort the report into three piles: things that need a permit, things that need a specialist, and things that need a Saturday. The Saturday pile never goes in an amendment. Ever. Asking a seller to replace a bathroom fan cover is how you lose credibility on the panel replacement three lines down.

Then I call the lender and get the closing cost number, because that sets the ceiling on the credit before I know what I want to ask for.

Then I pull the listing history and the seller’s likely situation. Then, and only then, do I write the ask, and I write it as specific jobs and one dollar amount, in the right boxes, with a response deadline that leaves us room inside the option period.

Submitting a repair request on the last day of the option period gives the seller zero reason to cooperate and it is the single most common self-inflicted wound I see. They know you are out of runway. So do not be out of runway, and if you are going to be, buy more with box (7).

The four posts before this one in this series cover what actually shows up on the report, what the common items really cost, why the format makes an ordinary house look condemned, and how an insurance quote can end a deal inside the same option period. Worth reading in that order if you are staring at forty pages of red text right now.

• Every Texas home inspection report flags the same ten things
• The ten most common inspection repairs cost less than buyers fear
• Texas inspectors are required to report things that do not matter
• Your insurance quote can kill your home purchase

And if you want the background on the clock itself, we have a plain English explainer on the Texas option period, a full guide to home inspections in Austin, and a guide to earnest money and option periods. If your ask is heading toward closing cost help more broadly, our post on seller concessions covers rate buydowns and the rest of it.

Lets talk about your report

The reason I like this moment in a transaction is that it is one of the few places where having the right person in your corner shows up as an actual dollar amount, on an actual settlement statement, the same week. Not someday. Not in appreciation. That week.

I read reports for a living and I write these amendments constantly, and I will also tell you when the honest answer is that we need an engineer before anybody asks for anything. If you are under contract right now and the clock is running, or you are about to be, send me the report and lets go through it. I will tell you what I would ask for, what box it goes in, and what I would let go.

Ed Neuhaus has been representing buyers in Austin and the Hill Country since 2009. Be safe, be good, and be nice to people.