The Offer, Contract and Due Diligence
You’ve found a home that you like and now it’s time to make the Seller and offer. While most anything can be negotiated, here are the basics of what’s negotiable in North Carolina:
- Offer Price
- Earnest Money
- Due Diligence Fee
- Due Diligence Period
- Any included Personal Property
- Any excluded Fixtures
- Seller Paid Closing Cost requested
Offer Price is how much you would like to pay for the property. This could be more or less than the Asking Price depending on how market conditions dictate. Your agent will provide you with recent comparables in the neighborhood as well as trends for the price point to help guide your offer.
Earnest Money, Due Diligence Period and Due Diligence Fee – stick with me here. In North Carolina, the Offer to Purchase and Contract does not have any built-in contingencies like is found in another states. There’s not a provision if the house doesn’t appraise or the Buyer’s financing falls through – there’s only a due diligence period. The Due Diligence Period allows you, the Buyer, to purchase time to complete any inspections, appraisals, surveys, any analysis that is needed to determine if the house is right for you. During the Due Diligence Period, the Buyer can walk away for any or no reason whatsoever. To compensate for this, a Due Diligence Fee is paid to the Seller at the time of accepted contract.
The Due Diligence Fee is intended for the Seller to cash immediately and keep if the contract does not move forward towards closing. If the property closes, the Due Diligence Fee is credited to the Buyer as money paid in advance. However, if the transaction falls apart, it’s liquidated damages for the time off the market. If the contract terminates under Due Diligence, the Earnest Money which is held in escrow for the Buyer, is returned to the Buyer automatically.
Once the Due Diligence Period is over, if the contract fails to close and it is the fault of the Buyer, the Seller may request the Buyer’s Earnest Money Deposit.
Closing Day is when the property is officially transferred from the Seller to the Buyer. For most, this is when you get keys and move in however that’s not always the case. Work with your Realtor and your lender to ensure that you are able to move in and take possession when you desire.
Fixtures are items that are screwed, glued, nailed, tacked, or otherwise permanently affixed. This would include cabinetry, lighting, plumbing fixtures, flat panel tv mounts, dishwashers, built-in microwaves, etc. Personal Property are items that don’t meed that standard like refrigerators, washers, dryers, flat panel tv’s.
Requesting Seller Paid Closing Costs is a way of financing a portion of the closing costs into the transaction. This isn’t always possible but occasionally, a Seller will agree to provide some Seller Paid Closing Costs.