North Carolina Offer To Purchase Changing January 2011---Due Diligence

As I have been writing about the changes to the North Carolina offer to purchase contract; this one is one that for me and many Realotrs I have talked with about the changes offers the largest gray area for us. It is the due diligence period and due diligence money.

Under the current offer to purchase contract there is none. The buyer has certain dates set up throughout the contract for which they are required to make loan applciation, perform inspections and get loan approval. Each of them has an escape clause (so to speak). The new one removes all those phrases form the contract and replaces them with due diligence.

The question that I and many of my fellow Realtors have is what is an acceptable time period? There has never been any concrete dates put in on the old contract. However; there was always an acceptable practice as to what the "norm" became among fellow Realtors. What constitutes an acceptable time frame? The key here is that the home is going to be, in essence, off the market for that period of time. Are sellers going to want their homes off the market for 30 to 45 days? If so, what is it going to cost the buyer to do that?

Becasue part of the due diligence is a due diligence fee. This is a NON-REFUNDABLE amount of money that the buyer is going to give the seller to take their home off the market while the buyer performs the necessary inspections, has the bank process the loan and get an appraisal done on the home.

During the class that was taught in regards to the changes coming out; it was implied that the due diligence period would be up to 3 to 5 days prior to closing. Well, considering that depending on the type of loan you are applying for that period could be anywhere from 30 to 60 days to close a contract from acceptance. That is a long time period without some substantial money put down to protect the seller.

Time will tell on what the sellers and buyers end up taking as a norm in regards to a due diligence fee and time period. But for now; make sure your Realtor is negotaiting on YOUR behalf. That due diligence time period and fee can be a costly mistake.....

Dave diCecco
Realtor/Broker
www.davedicecco.com