When is a property SOLD?
Your neighbor said he sold his house but months go by and he’s still there. What happened? Real estate sales go round and round and what was true at one time may have no basis in reality today. The truth is, in real estate, nothing is truly sold until it is recorded at the courthouse. There was a time when a contract to purchase almost always ended in a closing. That is no longer true.
In January, 2011 all residential real estate contracts in North Carolina added a due diligence clause. For a period of time after the signing of a contract, buyers now have the right to walk away from the contract without penalty for any reason or no reason. The length of the due diligence period is negotiated between the buyers and sellers but is typically between thirty and sixty days.
This due diligence period was put in place to replace several addendums including the repair request addendum, the financing addendum and others. It was designed to give buyers time to do any inspections they wanted to do, put their funding in place, secure surveys, appraisals and any other studies they wanted and negotiate any repairs or concessions they might want from the sellers.
Unfortunately, too many buyers are using the due diligence period more like a “Lay-A-Way” time where they have a secured contract but no obligation to the seller. For sellers, it creates a very stressful situation. Until the due diligence period is over, the seller is living in limbo. I’ve been involved in several contracts in which the “buyer” simply saw a different property come on the market and walked away from the contract.
As a REALTOR® I have felt empathy for sellers under this new system, but until recently was really unaware of just how frustrating it is for sellers. Since my husband and I have recently “sold” our own home, we know first-hand how it feels from the seller’s perspective. We have now survived the due diligence period and fortunately for us, the buyers and their agent have been considerate of our feelings so it has not been as hard as it might have been.
In order for the due diligence contract to work, buyers should only enter into a contract if they have truly explored their options and the market and are acting in good faith. Once a contract is in place, the buyer should order all his inspections, line up his money and be ready to move forward. Once all his due diligence is complete, even if the time has not expired, it would be thoughtful of him to go ahead and let the seller know he plans to move forward.
Sellers should insist that there be enough time between the due diligence period and the closing so that they can make their own arrangements after the due diligence period has passed.
And here’s a thought: Buyers and sellers, perhaps this is a good time to practice the REALTOR®’s code of ethics. You may know it as the Golden Rule. “Do unto others as you would have them do unto you.”