The seller is giving you a credit. Whether it is for an old water heater, or for the broken sliding doors and sticking windows that he doesn’t want to bother to fix. If the purchase is in cash, we write up an addendum with the credit amount. Both parties sign and it is given to the closing agent to make the adjustment on the settlement statement. When the purchase is financed the bank will not approve of repairs not completed, so it is written as a Credit for Closing Cost.
Closing cost for financing can include an appraisal fee, insurance, processing fee, closing fee, lenders coverage, and more. This is why talking to a lender first to determine how much cash you will need to close is the first step.
One of my buyers did just that and when making the offer to buy a condo, she included a Credit for Closing Cost, a big one, and the seller agreed. The credit was too big for the bank to agree to when the negotiations were finished but in the end, the buyer had funds in her pocket to fix up her new place.