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You have your answer. We report, they decide. Paint on a pre 1978 is a biggun. This is a guideline that you will not be able to get around. Paint the garage.
2) Refuse to paint the garage and put the house back on the market. The next buyer may also choose FHA financing, though, and you would be in the same position.
3) Make the buyers paint the garage since this requirement is a result of their financing option. If they refuse, either you paint the garage or the house goes back on the market.