What Are a Buyer's Options After a Home Inspection in Minnesota?
After a home inspection in Minnesota, a buyer has four main paths: request the seller make specific repairs before closing, request a closing cost credit (cash at closing), negotiate a purchase price reduction, or cancel the purchase agreement and recover their earnest money. The right choice depends on loan type, the severity of findings, and the current state of negotiations. Under the 2016 MNAR Inspection Contingency form, still in use today, if the parties cannot reach agreement, the purchase proceeds as-is rather than cancelling automatically. Most buyers and agents do not know this. Getting your response strategy right the first time matters more in Minnesota than most states.
By Darin Bjerknes | June 10, 2026
The inspector just emailed your report. Forty-three pages. Photos of the electrical panel, a note about the furnace age, something flagged near the roof decking, and a deferred maintenance item on the gutters. You're under contract on a home in Woodbury, maybe a split-level in the high 400s near Bailey Elementary, or a two-story in Settlers Ridge, and you now have 10 days to figure out what to do with all of it.
This is the moment most buyers freeze. They don't know whether to ask for repairs, ask for money, lower the price, or walk away. Their agent tells them they have options but doesn't always explain how each one works differently in Minnesota, or why the loan type in their pocket changes everything. I see this play out on nearly every transaction I work. Here's how to think through it clearly.
The Minnesota Inspection Contingency: What the Form Actually Says
Before you decide what to ask for, understand the form your offer is written on. Minnesota REALTORS® (MNAR) updated their Inspection Contingency form on August 1, 2016, and the change was significant.
Under the old form, if you submitted an inspection response (a list of repair requests or asks) and the seller countered, and you couldn't come to agreement, the purchase agreement was automatically cancelled. You got your earnest money back and walked away.
Under the current form, that is no longer the default. If the parties submit positions back and forth and cannot reach agreement, the purchase now proceeds on the original terms, as-is, with no repairs or credits. The deal does not cancel. It keeps moving toward closing.
This is not a small distinction. Buyers who don't know this can inadvertently waive their ability to cancel simply by engaging in a back-and-forth that goes unresolved. The only way to cancel during the inspection period is to take an affirmative cancellation action within your 10-day window, or reach an impasse and then both parties agree to cancel separately, which requires the seller to cooperate.
The practical implication: your inspection response matters more than buyers often realize. You're not just negotiating, you're also managing your exit rights.
Path 1: Request Repairs Before Closing
Asking the seller to fix specific items before closing is the most direct path. It works well when the issues are clear, contractor-resolvable, and tied to safety or habitability. Common examples in east metro homes: a furnace in its final service years, a roof with less than two seasons of life, exposed wiring in an older panel, or a failing sump pump.
The advantages are real: the problem gets fixed before you move in, you don't have to manage a contractor in the first weeks of ownership, and for certain loan types the repair may be required anyway.
The disadvantages are also real. Repairs introduce timelines. The seller picks the contractor. You don't always know the quality of the work until after closing when it's too late. And in Washington County's spring market, where homes in Woodbury are moving in around 44–52 days, re-inspection delays can compress your closing window uncomfortably.
One nuance worth knowing: under the MNAR purchase agreement, your inspection response must specify what the seller is required to fix. Vague asks ("address all items on the inspection report") don't create enforceable obligations. Be specific.
Path 2: Request a Closing Cost Credit
A closing cost credit is cash from the seller, applied to your closing costs at settlement. If you negotiate a $6,000 credit, you bring $6,000 less to the closing table. That money can go toward loan fees, title insurance, prepaid items, or any other closing cost your lender allows.
Most buyers prefer credits over repairs for straightforward reasons: you choose the contractor after closing, you control the timing, and the deal stays on track without a re-inspection. Sellers often prefer credits too, it keeps the sale moving, avoids contractor coordination, and prevents disputes over repair quality.
Here's the critical Minnesota detail:
Do not label the credit as a repair credit.
When an addendum says "Seller to provide $6,000 credit for foundation waterproofing repairs," your lender's underwriter is now required to verify those repairs were completed before funding the loan. That can trigger a reinspection requirement, documentation requirements from licensed contractors, and potentially a closing delay. The same $6,000 labeled simply as "a credit toward buyer's closing costs" sails through underwriting with no conditions attached.
Talk to your lender before you submit your inspection response. Ask them exactly how to word any credit. This is not a minor drafting question, it's a lender compliance question.
Path 3: Request a Price Reduction
A purchase price reduction permanently lowers the purchase price. On a financed transaction, it also lowers your loan amount, which reduces your monthly payment and the total interest you'll pay over the life of the loan.
Sound good? It is, over time. The catch is that a price reduction does not put cash in your hand at closing the way a credit does. On a $475,000 home with a $10,000 price reduction, your monthly savings at 6.9% over 30 years is roughly $67 per month. A $10,000 credit at closing, by contrast, is $10,000 available for actual repairs the week you move in.
For most buyers in the east metro, a closing cost credit is the better tool when you need cash to address issues. Price reductions make more sense when you're trying to get the appraised value in line with a purchase price that's already stretched, or when credit limits from your loan program prevent you from receiving more in concessions.
On that point, loan programs cap seller credits:
- Conventional loans: 3% of the purchase price with down payments under 10%, up to 6% with larger down payments
- FHA loans: Up to 6% in seller concessions
You cannot exceed these caps regardless of what the parties agree to. The lender will reduce any excess at closing.
The FHA Complication
If your loan is FHA-insured, there's an additional layer to manage after a home inspection, one that catches buyers and sellers off guard more than almost anything else in a transaction.
FHA appraisers are required to flag any property condition that violates HUD Minimum Property Standards. These standards require that a property be safe, sound, and sanitary.
Common triggers include:
- A roof with less than two years of remaining life
- Missing handrails on staircases
- Peeling lead paint on pre-1978 homes (which includes a large portion of Oakdale, Maplewood, and Cottage Grove housing stock)
- Exposed wiring
- Broken windows
- Non-functional heating systems
When an FHA appraiser flags an item, it becomes a required repair, not a credit, not a price reduction. The lender will not fund the loan until the flagged condition is remediated and the original appraiser re-inspects and signs off. This process typically adds one to three weeks to a closing timeline.
Two Critical Points for FHA Buyers and Sellers
First, the buyer's independent home inspection and the FHA appraisal are separate processes. An inspector might flag 20 items; the FHA appraiser might flag 3. Only the appraiser's conditions block the loan.
Second, if the seller refuses to complete required repairs, the FHA lender will decline to fund. The buyer's options at that point are limited: cancel the transaction using their financing contingency (recovers earnest money), or pivot to an FHA 203(k) rehabilitation loan if the property qualifies.
In Lake Elmo acreage properties, Oakdale 1970s ramblers, and older Maplewood homes, the pre-1978 lead paint disclosure overlap is especially important to understand before you negotiate an inspection response. Talk to your lender about which items the appraiser is most likely to flag, and coordinate your repair requests accordingly.
How to Choose Your Path
Here's how I walk buyers through this decision in the east metro:
Safety and structural items, especially anything that will affect financing, should generally be requested as repairs before closing, not credits. The lender may require it anyway, and the risk of the issue worsening between now and your move-in is real.
Cosmetic deferred maintenance, worn carpet, aging paint, minor wood rot on trim, is better addressed with a credit. Get the cash and hire your own contractor after closing.
When the inspection reveals a large number of modest issues rather than one or two big ones, consider requesting a single closing cost credit to cover a reasonable portion of the total, rather than a line-by-line repair list. A long repair list invites conflict, misunderstanding, and contractor substitution disputes. A clean credit request closes cleanly.
If you're genuinely uncertain whether you want the house after what the inspection revealed, cancel within your 10-day window and recover your earnest money. Minnesota's inspection contingency is designed to protect exactly this situation. But you must cancel affirmatively, the deal does not cancel on its own if negotiations stall.
What Sellers Should Know
Sellers in Woodbury, Stillwater, and Lake Elmo often feel blindsided by post-inspection requests. A few things to keep in mind:
You are not legally required to accept any inspection response. You can counter, decline, or do nothing. But if you decline entirely and negotiations stall past the 10-day window without the buyer cancelling, under the current MNAR form the deal is alive and moving toward closing on original terms.
Accepting a credit request is almost always faster and cleaner than making repairs. You avoid contractor coordination, re-inspection delays, and disputes over repair quality. The buyer gets the outcome they want, you get a clean path to closing.
If your buyer is on an FHA loan and your home has items that will likely trigger HUD conditions, it's worth addressing those proactively before the appraisal, ideally before the property even goes on the market. A flagged condition on an FHA appraisal stops the clock on everyone's timeline and can jeopardize the transaction entirely if the issues are extensive.
Frequently Asked Questions
Can a buyer cancel a purchase agreement in Minnesota after a home inspection?
Yes. If a buyer has an inspection contingency, they can cancel the purchase agreement during the 10-day inspection period and recover their earnest money in full, as long as they cancel affirmatively before the contingency deadline. Under the current MNAR form effective August 1, 2016, the deal does not cancel automatically if inspection negotiations fail, the buyer must take action to cancel.
What is the difference between a repair request and a closing cost credit after a home inspection?
A repair request asks the seller to fix specific items before closing. A closing cost credit is a cash payment from the seller applied to the buyer's closing costs at settlement. Most buyers prefer credits because they keep the deal moving and allow the buyer to choose their own contractor. The key rule: never label a credit as being for a specific repair in the addendum, or the lender may require verification that the repair was completed before funding.
Does the seller have to make repairs after a home inspection in Minnesota?
No. The seller is not legally required to make any repairs. The buyer can request repairs, but if the seller declines and negotiations stall, the buyer must cancel within the inspection period or the purchase proceeds on the original terms. The exception is FHA appraisal conditions, if an FHA appraiser flags required repairs, the lender will not fund until they are addressed.
How much can a seller credit a buyer for repairs in Minnesota?
Credit limits depend on your loan type. Conventional loans allow 3% to 6% of the purchase price depending on down payment. FHA loans allow up to 6%. VA loans allow up to 4% in concessions. These caps apply to all seller-paid items combined, including agent credits, closing cost contributions, and repair credits.
What happens if my inspection contingency expires in Minnesota without an agreement?
Under the current MNAR form, if the inspection contingency period passes without agreement, the purchase proceeds as-is on the original purchase agreement terms. The buyer loses the ability to cancel based on inspection findings. The only exception is if the buyer still has an active financing contingency that can be used to exit, but that has its own rules and timeline.
How to Submit an Inspection Response in Minnesota
Step 1: Review findings with your agent before deciding
Before writing anything, walk through the inspection report with your agent. Separate findings into three buckets:
- Safety/structural (address directly)
- Significant deferred maintenance (consider credit)
- Cosmetic (either accept or ask for a modest overall credit)
Don't react line by line.
Step 2: Confirm your loan type constraints with your lender
Call your lender before submitting any response. Ask how much credit you can receive without exceeding program caps, and confirm that the credit language in your addendum does not reference specific repairs. Get this in writing if possible.
Step 3: Submit a single, clear inspection response
Use the MNAR Inspection Response form with your agent.
For repairs, be specific about:
- What must be done
- What type of contractor should perform the work
- The completion deadline
For credits, write:
"Seller to pay $X toward Buyer's closing costs"
with no reference to specific repairs.
Keep your response focused. Long lists invite conflict.
Step 4: Respond to the seller's counter within your window
The 10-day contingency clock does not pause during negotiations. If the seller counters, you still need to either reach agreement or affirmatively cancel before your deadline. Track your dates carefully.
Thinking about your options after a home inspection in Woodbury or the east metro? Whether you're a buyer trying to figure out what to ask for or a seller trying to understand your exposure, let's talk through it together. Reach out at [email protected] or book a call at calendly.com/darintheminnesotan.
Darin Bjerknes | Minnesōtan, Brokered by REAL | [email protected]
