Due Diligence – Part 2: Home Sellers
A few basics for North Carolina Home Sellers Regarding Due Diligence.
As we mentioned in Part 1, Due Diligence for Realtors®, here in the North Carolina Raleigh-Cary area due diligence (in a nut shell) involved the set amount of time a buyer has to do the home inspection, appraisal, pest, radon and lead paint inspections, etc., to decide if they want the home after everything has been thoroughly inspected. The sellers are compensated for this time with a Due Diligence Fee that is non-refundable should the buyers decide the home is not for them.
If you’re not yet familiar with the Due Diligence process take a look at our earlier blog series that details What’s in the new NC Offer to Purchase Contract.
As the saying goes… buyers beware, but the new Due Diligence period is put in place to protect the buyer should unforeseen problems arise.
Feedback from a few of our recent sellers we wanted to share with you:
The Due Diligence period = Sellers Beware.
One of our roles as Realtors® in many home buying and selling transactions is to be the calm in the storm. Selling a home can be a stressful and emotional time and it’s my job as a Realtor® to allow YOU to stay focused on the excitement of moving on to a new phase in your life. As Realtors® who have had ample experience navigating our clients through this new Due Diligence process… we’d like to share some of the tips we’ve learned along the way.
Guide 2 of 3 in our Due Diligence Series: Sellers
- When you receive an offer – Make sure you feel comfortable with the length of the due diligence period and with how much you’re being compensated (from the due diligence fee) for that amount of time.
Congratulations you got an offer!! Before jumping up and down let’s look closely, it’s a bit of a balancing act. The buyers need time to investigate the home but as a North Carolina home seller there’s NO guarantee during the Due Diligence period the buyers won’t walk for any reason ranging from… a handrail that needs tightening, foundation problems, because they found a different home they like more, or even just because they got cold feet.
It’s probably unrealistic to expect a buyer will put a large percentage of the purchase price down for due diligence… consider that the buyers will also be investing in the appraisal, home inspection, pest, radon, lead paint, survey, etc., BUT you have to feel comfortable with the amount.
- HOW MUCH?Some feel that buyers should be expected to compensate the home sellers for an equivalent amount of their mortgage for that period of time.Example: If the home buyer wants 4 weeks for the Due Diligence period and your mortgage is around $2500/month, a seller may expect about $2500 in Due Diligence fee.
In the Triangle market we’re seeing everything from $250 for a 3 week period to thousands for a 60 day period – all is on the table for negotiation.
There doesn’t seem to be a lot of consensus in our Triangle area regarding how much the Due Diligence fee should be. Naturally, sellers feel the fee should be higher, home buyers want the fee should be lower, and we as Realtors® work to find a comfortable balance between.
The important thing is to stay within your level of comfort. Assess the risk with the reward, and with your Realtor®, decide if you can live with the results.