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What is this Due DIligence?
Dated: July 1 2019
Many of our clients are first time home buyers or people who have bought homes in other places but are new to the home buying process in North Carolina. So while you may be familiar with different contingencies, we wanted to dive in a bit deeper to explain what due diligence means when buying or selling a home in North Carolina.
First off, the due diligence fee is exactly what it sounds like. It is a FEE, not a deposit. So regardless of the outcome, if your offer is accepted, you do not get that fee back. It's paid directly to the seller at the time of acceptance of your offer and it is theirs to do with as they see fit.
You are essentially paying the seller to take their home off the market while you do exactly as it says, your due diligence. This is the time when we will work together to order inspections, surveys, and most importantly make sure that your financing is in order. We will want to make sure that all repair items that are important to you have been approved to be done by the seller and that at the very least, the appraisal has come back and we have addressed any outstanding issues before the "due diligence period" expires.
So what is an appropriate amount of due diligence? Well, that completely depends on not only the market, but also the location and the sales price. You'll want to consult your agent when discussing this to make sure you're putting the appropriate due diligence fee amount on the contract. That's why you've hired an expert after all, right?
What happens to that money when we close? Here's the important thing to remember about the due diligence fee. Although you pay it to the seller, it will count as a credit to you at closing. That means if you paid the seller $500, that's $500 less you'll have to bring to closing. Paid them $1,500? That's $1,500 less you have to bring.
But what happens if we don't close? If you decide to walk away for whatever reason (which is completely within your rights) then the seller keeps the money. It's one of the very few forms of recourse that a seller has in North Carolina.
If you have any additional questions about due diligence, or real estate in general, reach out to one of our agents via phone or text at 980-272-7634.
Prior to real estate, Nikki worked full time in HOA management. Her background in associations gives her an interesting take on the process and can really help you understand those bylaws and declara....