What are the pros and cons if I go with one vs the other? I also heard that using the words "credit" or "repair" in the addendum could signal a red flag to a lender.
I rather use credit, so that you don't have to wait for the repair to get done, and by using the credit, you can choose your own person to fix. Credit is pretty standard, at least in IL, so I don't think it'll be a red flag.
If you ask for repairs, I believe they have to be completed prior to closing, which could delay things.
However depending on the purchase price v the cost of the repairs, be aware that you can run into Fannie Mae restrictions-- I believe seller credits can't be equal to more than 6% of purchase price (or possibly 6% of loan, I'm not sure which)
Problem with repairs is the seller is going to take the cheapest rout possible, corners will be cut and quality of work compromised. I have seen this too many times.
I agree with @Thomas S. . I bought a house that I requested some work be done. The homeowner had the work done, however he halfa**ed it and some of it was still an issue (roof leak) and another fix is just a questionable eye sore. I honestly didn't want to deal with the work after moving in (we were in a rush) and knew I would probably get work that wouldn't be as nice as I wanted... however the roof leak I ended up having to fix it anyway!
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