Due Diligence – Part 3: Home Buyers
A few basics for North Carolina Home Buyers regarding Due Diligence.
As we mentioned in Part 1 for Realtors and Part 2 for Sellers, here in the North Carolina Raleigh-Cary area due diligence (in a nut shell) is a clause in the new Offer to purchase contract that sets a time frame for a buyer to do everything they need to do (the home inspection, appraisal, pest, radon, lead paint inspections, mortgage approval, etc) associated with moving forward with the purchase of the home. The sellers are compensated for this time frame with a Due Diligence Fee that is non-refundable should the buyers decide the home is not for them for what ever reason or no reason at all…
If you’re not yet familiar with the Due Diligence process take a look at our earlier blog series that explains in details and talks about What’s new in NC Offer to Purchase Contract.
We’ve all heard, buyer beware or caveat emptor… but the new Due Diligence clause (in my opinion) was set in place to protect YOU as the buyer should any unforeseen problems arise. Making it less tangled in disagreement over the release of earnest money. Remember, as a buyer you have the right up to 5 PM on the last day of your due diligence period to walk away from the purchase of the home for any reason at all… ranging from inspection problems, mortgage issues, or simply because you changed your mind.
There are some things we’ve learned as Realtors who have experience navigating our clients through this new Due Diligence process that we would like to share.
Guide 3 of 3 in our Due Diligence Series: Buyers
- Work with your Real Estate Agent to start early in the Due Diligence period to be sure all your ducks are in a row and everything that needs to be done during the Due Diligence period can be accomplished during that time.
- Be respectful of the time you have within the due diligence period (asking for an extension can really put off the sellers) and the dates are “time is of the essence”
- Check with your mortgage lender
- Understand that you’re asking the sellers to reserve their home for you for the duration of the due diligence period without any guarantees; and consider this when deciding how to proceed when offering due diligence money.
- This due diligence fee is what you pay directly to the sellers for the the due diligence period… some contract offers may include earnest money once the due diligence period is over. This practice can potentially alleviate earnest money falling into dispute (good to have warm fuzzies about not tying up that larger chunk of change)!
- Don’t offer more than you’re comfortable with. Should something come up during your due diligence period and you do decide to terminate the contract remember the seller keeps the due diligence fee.
Work to find a balance everyone feels OK about.
- Ask questions, and lots of them. OF your REALTOR®, lender, inspectors ~ everyone! If you’re unsure or curious about how something works or what something means don’t hesitate to ask. Rely on your experienced North Carolina Realtor for information and guidance.
Gather information, feel comfortable with the process and HAVE SOME FUN! If done properly this can be a very rewarding process as you move forward on the purchase of your dream home!