What is DUE DILIGENCE in NORTH CAROLINA Real Estate?
Buying a home in NORTH CAROLINA? You will probably hear the term DUE DILIGENCE several times. The Due Diligence process has changed over time, and can differ from state to state. If you have purchased a home in the past or in another state, keep in mind that this process may be different from what you experienced during your last purchase.
DUE DILIGENCE 101 or HOW TO UNDERSTAND DUE DILIGENCE PERIOD – REAL ESTATE.
BY DANIELLE EDWARDS
Due Diligence FAQ
The DUE DILIGENCE Process was created to benefit the buyer and the seller.
How does The Due Diligence Process help the seller?
Before the seller of a home officially takes it off the market, they will receive a certain amount of money, upfront from the buyer. If the buyer follows through with the home purchase through closing, the seller will then credit the buyer the due diligence money at closing time.
How does The Due Diligence Process help the buyer?
The buyer uses due diligence as a way to show their good faith that they are very serious about purchasing a home from the sellers. The buyer knows if they back out for ANY REASON before 5 pm at the end of the closing period, they will lose their due diligence fee and money spent on inspections & appraisal.
What is a normal due diligence amount for buying a home in North Carolina?
Great question!! This amount has changed drastically in the past two years. Given the competitive market in Charlotte and lack of inventory, we are now seeing the due diligence amount being more than the earnest money amount. Simple answer: It could range $250-$10,000 depending on the price of the home.
Here are some recent Due Diligence amounts on homes I have closed in Charlotte, NC:
- $369,000 home = $1500 due diligence
- $567,000 home = $3000 due diligence
- $340,000 home = $2000 due diligence
This amount is always negotiated between the buyers, sellers, and corresponding agents. You might offer $800, and the seller may come back and say $1,500. When in a multiple offer situation, the Due Diligence amount is sometimes even more important to the seller than who has made the higher offer! If it is between you and another buyer, the seller will want to close the deal with the buyer who seems the most serious and the most financially able to purchase their home.
When do you pay the due diligence money to the seller?
Within 5 days of executed contract. This is normally done within 24 hours, but there is a 5 day period if the buyer’s agent checks the 5-day amount on the offer to purchase contract.
How long is the due diligence period when buying a home in North Carolina?
This is a negotiated period. The shorter the period, the better the offer to the sellers.
I would say 2.5-4 weeks is typical for a due diligence period in North Carolina, NC.
Your offer might say 4 weeks, the seller may come back and ask for 3 weeks instead.
What is earnest money when buying a home in North Carolina?
Earnest money is typically 1% of the contract price. Again, negotiated.
The buyer will give their agent an earnest money check once the buyer’s offer is accepted. This is normally made out to REMAX EXECUTIVE(for example). The check is deposited for escrow at closing. The buyer’s agency will refund the earnest money within 2-5 business days if the buyer were to back out during the due diligence period for any reason. If for some reason there is a discrepancy with releasing the earnest money, then you will have to go to mediation. (I have never had that happen). However, at 5:01 pm on the date the due diligence period ends that earnest money is no longer refundable. It will stay in escrow for you and be a credit to you at closing.
Some agents will show a copy of both checks when presenting the offer. Always make sure your account information is covered. This shows good faith. About 60% of the time, this is how the process goes. There are times a buyer will not have checks on them and the checks are presented after their offer is accepted. It can be a personal check or a certified check. Certified is typically preferred, but not necessary.
DO YOU HAVE A BUYER’S AGENT?
If you are looking for a buyer’s agent in the Charlotte area I would be honored to work with you. There are also two other Realtors on my team to help assist you if you are looking in an area that I am not an expert in. It is very important to choose an agent who works in the trenches in the area you are looking in. I can also help refer you an agent in North or South Carolina with my network of fantastic agents I have worked with. I am licensed in NC/SC and cover parts of the Fort Mill/Lake Wylie area.
For more great tips on buying a home visit www.SoldOnDanielle.com
Contact me below and let’s talk real estate!