Pittsboro Real Estate Agent Eric Andrews explains the importance of Due Diligence Dates for both buyers and sellers of real estate in North Carolina. It is not fair for a buyer to hold up a sale due to not getting their DD done in a reasonable amount of time. Appraisals and inspections are part of a contract. Be sure to plan accordingly when making a purchase offer.
Speaker 1: In the state of North Carolina, can you move your due diligence date?
Speaker 2: You can. Well, first of all, let me explain briefly what a due diligence date is. In North Carolina the seller right now has an expectation of some money. Money written directly to the seller. And that is compensation to the seller for taking the property off the market. So no one else can subvert the primary contract. You’re in a primary position. You get to decide whether or not you want to buy this property. So let’s just say for the sake of argument, it’s a $200,000 house, you do $1,000 earnest money, but then you do $1,000 due diligence money. $1,000 goes directly to the seller. That’s it? That money’s gone, bye-bye, you don’t get it back. And now you get to investigate whether or not you wish to buy this property. So you go there and have a home inspection.
And Mr. Bett says, this house is falling apart. The foundation’s horrible, the roof’s about to cave in you say, okay, I’m not going to buy it. You lost your due diligence money. You get your earnest money back and you get to walk away for any or no reason. So that was the compensation to the seller.
But some of our non-local agents think that these due diligence dates are something that can just be changed easily. And they’re not. You agreed for $1,000 to investigate the property for 20 days. And then you’re like, “Oh, sorry, the appraisal didn’t come through. We need more time.” Well, the seller might not give you more time or the seller might ask for more money. Now, what are you going to do? You’re going to say, “Well, then we’re not going to buy.” That’s fine, but you’ve lost some money.
Or an inspection comes up and inspectors aren’t engineers, they’re home inspectors. They’re good people. But if they see a leaning pier in the foundation, they’re going to say, “Call a structural engineer.” And then the agent will call up the us listing agents and say, “We need more time to bring out the structural engineer.” No, you had your time. I mean, I don’t like the overall pervasive attitude that due diligence doesn’t mean anything. That is what you agreed to in the beginning now.
There can be some extenuating circumstances that nobody can control. And this is a COVID world. So you might not be able to get somebody out there. But I wish the agents would plan accordingly and have plenty of time and realize that the seller… If you bring me an offer, I’m expecting that you stick with that due diligence state.
And if you don’t, I’m going to have a conversation with my seller saying, “They’re two, three grand into it. Let’s ask for another two grand because I don’t like this loosey-gooseyness and everything.” A due diligence contract means the buyer can walk away for any or no reason. They don’t have to give you an explanation. They can say, “Eric, we want you to paint the house pink.” And if you say, no, they can walk away, but that money is payment for your time and the seller’s time. And I think that needs to be respected a little bit more.