Due Diligence Fee On Foreclosed Homes In North Carolina

Recently North Carolina changed the offer to purchase contract on Real Estate transactons. A lot of the contingencies that were present before were removed in favor of one Due Diligence period. During this time you have the right to inspect a home, get it appraised, and secure your financing. If at the end of this period you wish; you were able to walk away form the house no questions asked. All you lost was your Due Diligence fee. But, what if you are purchasing a bank owned home (foreclosure)? How does that apply to those transctions?

The banks are not in the market to collect Due Diligence fees and have far to many homes for which to manage nationally to keep up with each one and the dates they are due to decide. All the banks on a foreclosure have their own addendums in addition to the offer to purchase contract. So what do you do? How do you present an offer to the bank with a Due diligence fee pre printed on the contract?

I have recently negotaited a few of these transactions. Besides the ones I have done; talking wth other Real Estate agents the consensus is you do not charge one. All of the bank addendums you receive once you have agreed upon a sale price give you a ten day opportunity to have home inspections done on the home. If your Realtor has provided you with the comparables for the neighborhood then you should have no concern about the appraisal process. The only variable left is the loan approval.

The loan approval is a difficult one to handle. Though I have seen more mortgage brokers getting the standard stipulations up front when they pre-qualify a client. This allows them to start the process and when a home is selected it exepdiates the time for them to send it to underwriting for approval. In rare cases where the financing does not work out after the 10 day inspecton period; I have seen the banks refund the earnest deposit. The banks are not out to keep anyone's hard earned money; if through no fault of your own the financing falls through they will refund you your earnest money.

So, despite there being a Due Diligence fee now in North Carolina. there is NO regulation as to how much you have to charge or offer. Thus the banks have elected to forgo this fee and collect earnest money deposit with a 10 day opt out clause.

Dave diCecco
Realtor/Broker
www.davedicecco.com