Definition
Funds withheld from the seller at closing to cover potential issues or repairs.
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A portion of the sale price may be held in escrow to ensure the seller completes agreed-upon repairs or to address any post-inspection items. Holdback agreements protect both parties and are negotiated in the purchase agreement. Typical holdback amounts are 1-5% of sale price.
Pro Tip
Negotiate holdback amounts carefully—ensure they're reasonable and have a clear release timeline. Get written confirmation of completion in advance.
Example
The buyer withholds $15,000 until the seller completes foundation repairs within 30 days of closing, with proof provided.