Going over questions about due diligence from my previous video.
The recent video I did on due diligence got a lot of questions that I wanted to answer, so today I’m talking more about the due diligence rules in North Carolina:
1. Who pays the due diligence fee? The buyer pays the due diligence fee when they make an offer. They offer a certain amount of due diligence money and earnest money. The seller then allows the buyer to put the home under contract so that the buyer can do their due diligence within the agreed-upon due diligence period. The buyer can terminate the contract for any reason during this time. If a buyer terminates the transaction during or before the due diligence period, they forfeit their due diligence money, but their earnest money will be returned.
“Buyers are having to put down significant amounts of due diligence money, and you don’t want to put that money at risk.”
2. What happens if a buyer can’t get their loan? They’re going to have to terminate on or before the due diligence date. They’ll lose their due diligence money, but the earnest money will be returned. In today’s fast-paced, competitive market, it’s best to be very sure that you can get a mortgage. Today, buyers are having to put down significant amounts of due diligence money, and you don’t want to put that money at risk.
3. What happens if the seller won’t make repairs? In North Carolina, the contract is an as-is contract. However, that is not typically how we operate. Buyers have inspections done, they submit repair requests, and the buyer and seller will negotiate repairs. In some instances, sellers will refuse to make repairs.
If this happens, a buyer has two choices. You can either stick with the contract and handle the repairs yourself or terminate the deal. If you terminate, you’ll lose your due diligence money, but earnest money will be returned to you.
4. In a competitive market, should you waive the due diligence period? In a competitive seller’s market, the best thing to do is offer the seller no due diligence period at all. This tells the seller you are buying that home no matter what. You only want to do this if you are confident that the house has been well cared for and that there won’t be an issue with your loan. If you need to have the due diligence period, make it as short as possible. Don’t make it longer than two weeks.
If you have more questions about the ins and outs of due diligence in North Carolina, don’t hesitate to reach out to me. I’m happy to help.