When an offer in North Carolina is made, there are two important dates and two important checks that accompany all the terms and conditions of the offer:
The first date is the due diligence date; this is the time frame in which the buyer does all of their investigations concerning the property, including home inspections and loan processing. Again, regardless of your reason, you can cancel your contract at any time—as long as you do so on or before the due diligence date.
The second date to remember is the closing date. Everything in our contracts is negotiable. Typically, we see closing dates set about two weeks after the due diligence date, but it can be longer. The due diligence period is, on average, three to four weeks, depending on how competitive your offer is; the shorter the due diligence period, the better it is from a seller’s perspective.
Now let’s talk about the money:
In our market, the earnest money deposit is usually about 1% of the purchase price.
On the other hand, the due diligence money can range anywhere from $500 to $2,000 or more, depending on the price of the house and whether you’re in competition with other buyers for the same house. If a buyer terminates a contract before the due diligence date, the only money that is at risk is the due diligence money; your earnest money will come back to you unequivocally. So when you’re making your offer, you need to think through the process and consider how much money you’re willing to lose if you end up terminating the contract.
If you go all the way to closing, the due diligence and the earnest money deposit both come back to you at closing as part of your down payment.
The only way a buyer can lose everything—both the due diligence AND earnest money—is if you say that you’ll buy the home, but then cancel the contract AFTER the due diligence date. That’s considered a breach of contract, and you’ll receive neither of those deposits back.
When you’re interviewing prospective Realtors, talk to them about the due diligence process and what it means for you, because it’s different when looked at through a buyer’s eyes and a seller’s eyes.
At Real Estate Experts, we’re more than happy to discuss this period with you. All you have to do is reach out to us, and we’d be happy to help.