is Due Diligence Fee Taking The Place Of Earnest Money In Charlotte, NC.?

A trend seems to be coming up in transactions in the Charlotte, NC. market. Sellers are asking for more money on due diligence and less or nothing on earnest money. Which bodes the question as to why? Due diligence was supposed to be the dollar amount the buyer pays the seller directly to take the house off the market and allow the buyer to perform the necessary inspections, get the home appraised and finalize the loan documentation. At the end of the due diligence period if the buyer did not say they were not going forward with the transaction they would be able to recoup their earnest money but would only have lost their due diligence fee. because the way the system was set up last year the average fee ranged from $100.00 to a couple of hundred dollars and earnest money was from $1000.00 and up depending on the price point of the house and type of loan you were doing. But a trend seems to be happening and I am one that has for the past few months been doing the same thing..... Selling agents are asking for a larger due diligence fee and less or no earnest money. I am noticing (and am doing it myself), that fi the buyer is putting $1000.00 down I am asking for half in due diligence fee and the other half in earnest money. I just had an offer negotiated where the seller asked for no earnest money and all the money in due diligence fee.... So why is the trend heading that way? The main reason I think is that too many transactions recently are not closing and sellers are left with $100 or $200 and lost time off the market for the house. It is becoming more common in the agent comments "back on market buyer financing fell through". Or because buyers do not have a lot at stake in the transaction and they see another house they like they are walking away during the due diligence period..... As mortgage underwriting has tightened their standards, more and more loans are not getting approved near the end or the requirements they are asking is driving some buyers out of the market in the last hours of the deal. Sellers are getting upset because they have taken the house off the market in the prime selling season and want some type of restitution. I have been advising my sellers to ask for almost all the money in due diligence fee. They ask me what if the buyer balks at it. My answer is then they are not 100% totally sold on your house a still shopping around or settling and may walk anyway. With inventory levels so low this has become the time where sellers can dictate stronger terms on the negotiating table and good listing agents are doing that for their clients right now... Dave diCecco Realtor/Broker Coldwell Banker United Cell:704-519-7895 ddicecco@cbunited.com www.davedicecco.com