What Is Due Diligence When Buying A House In North Carolina?
How Does The NC Offer To Purchase and Contract Work?
The North Carolina Offer to Purchase and Contract is the document you use when purchasing real estate in North Carolina. It is currently 12 pages long and the most recent version just came out. It is a legal document and as such requires a good deal of attention and anyone unfamiliar with any aspect is advised to consult with a real estate attorney. As real estate agents we are not allowed to offer any legal advise nor make any changes to the wording of the contract. There are addendum's we can use, but I always advise clients to call the North Carolina real estate attorney who is preparing the settlement statement if you have any questions about the offer to purchase and contract.
What Is Due Diligence In The NC Offer To Purchase?
The first time most people see one of these contracts is usually right before they sign it and often it's done quickly especially in today's fairly hot real estate market. Of course signing a document for the most important buying decision in ones life shouldn't be rushed into lightly. However if you are sure this is the right house for you and your real estate agent has done a comparative market analysis that shows what you are offering for the home is a fair price, then push on. The contract has some guidelines and safeguards that protect both the buyer and seller of real estate in North Carolina. The main feature we will discuss today is "Due Diligence". There are three aspects of the due diligence clause in the NC Offer to Purchase and Contract.
- The due diligence period of time.
- The due diligence process
- The due diligence fee
What Is The Due Diligence Period?
When writing an offer on a home in Clayton, Archer Lodge, Knightdale or Asheboro, if its in North Carolina then there is a due diligence period. This is negotiated with the seller to allow the buyer the opportunity to perform any and all investigations to the property and to ensure all the provisions of their loan are met. The due diligence period begins with the effective date of the contract and ends on the date agreed to by both parties. The buyer must be sure that the period of time is enough to allow them to have home, septic, termite inspections done and a repair request sent to the seller. The time must also allow the loan officer (if there is one) to process the loan, order appraisals, surveys if needed.
What Is The Due Diligence Process?
The due diligence process gives the home buyer the chance to have any inspections, investigations and loan commitments completed to their satisfaction during the due diligence period. Before signing the Offer to Purchase and Contract the home buyer should find out from their loan officer how much time they will need to process the loan. It is possible that the buyer will not know with complete certainty that the loan will be approved before the due diligence date. Therefore the buyer must make a decision whether to proceed with the purchase or terminate the contract. The home inspections, termite, septic typically do not run afoul of the date but most home inspectors are busy and some need a week to ten days notice, so this should be considered also. Remember the date you agree on to be the due diligence date should not be the date you use to present a repair request to the seller. You need to have the repair request to the seller before the due diligence date so you have their response to the repairs. The buyer can ask for any repairs they would like the seller to complete but the seller is not obliged to do any of them. It is at this point that the buyer would decide to either terminate the contract or move forward to closing. If the seller agrees to do the repairs they must be completed in a good and workmanlike manner. The buyer has the right to verify the repairs were completed to their satisfaction.
What Is The Due Diligence Fee?
The due diligence fee is paid by the buyer directly to the seller and in some cases the bank who is doing the mortgage will want to see that check has cleared the buyers account. The fee, if any, is negotiated between the buyer and the seller to allow the buyer time to do their due diligence. There are certain factors that influence the amount that the fee will be and they include the desirability of the home the amount of days the home has been for sale, the price of the home. Once the contract is signed the home will be listed as contingent and as such is essentially off the market, so the seller needs to be compensated for that if the buyer decides not to proceed. The due diligence fee is applied to the sale price along with the earnest money deposit at closing.
When Is There Not A Due Diligence Fee?
The North Carolina Offer to Purchase and Contract - New Construction which is used when building a new home from the ground up does not have a due diligence clause. Many builders have their own forms they require a purchaser to use when buying a new home and so you may or may not have a due diligence section. Some builders use the standard Offer to Purchase and Contract and will require a due diligence fee and others choose not to. If you have any questions about writing an offer on a home in North Carolina, I would be glad to help. I can also recommend real estate attorneys in Clayton, NC who will answer any legal questions you may have about buying a new home in Clayton or the surrounding areas. If you starting the process of searching for a home to buy in the future, I'd be glad to send you blank sample forms of all the documents you might be faced with when buying that home. Send me an email at [email protected] or you can call me David at (919) 601-2268