Big Changes to NC Offer to Purchase Contract

Roger.  I don't know about lawsuits since consumers are loathe to spend the retainer for legal representation. 

However, I do see complaints with the real estate commission/boards, etc.  We are an easy target.

If this will cause agents to only write offers for pre-approved buyers or buyer they know are qualified, it will work.  There will be fewer contracts but more settlements. 

I just negotiated my first "due diligence" offer last week here in NC!  Treading in new waters (I represent the seller).  Should be interesting on how this works.  First interesting point we found is that normally within 48 hours of execution we hear when the inspeciton will be.  We had to call the buyer's agent and check in with her on this when we hadn't heard anything 5 days later.  She told us they are going through the loan process and appraisal before the inspeciton.  I am guessing it might be becasue in this market we are seeing more and more deals fall through on appraisal so they wanted to get that cost over with before paying for a slew of inspections (you know how sometimes 1 inspector calls in specialists!).

Roger - I agree that this contract is much simpler.  If we understand the Commission's purpose for this change it actually makes a lot of sense.  They spent countless hours dealing with complaints over whether an item in a home inspection was covered, working properly or by whom it had to be repaired.  This way, it doesn't matter.  Straight and clean negotiation.  In addition, another big change is that the EMD is the SOLE remedy for a seller upon buyer's breach.  The contract is clear on there being no suing for specific performance by a seller.  Great breakdown!

Sounds like big fun getting all the part time brokers to learn the new features. The CO contract has undergone changes this year too. Looks like we are all getting an upgrade.

I few years ago maybe 2003??? the CO RE Commission told us they were streamlining our contracts and when we got them they were two pages longer.

Roger- Georgia did this about 4 years ago, BUT we still can, and I'm wondering if you can? still add a financing contingency.  We can have a due dilligence period of say 7 days, but still add a financing contingency form with a 20 day period.  And for example, it's not legal to NOT be able to add a FHA financing contingency because of FHA rules & laws... so just wondering if you could still add that contingency with another form to be made part of the contract.  Our "add on" has evolved to this over the years.

Hi Roger -- In our market, inspections are normally completed in 7-10 days while loan approval is around 30 days.  Since it's an all or nothing approach, this ties up the sellers home for whatever the longest contingency is, which I would think would be loan approval.  These changes also seem to really put a buyer on notice that they have real skin in the game after the due diligence period.

Roger,

We have written 4 contracts on this new form this year (hooray!)...each one, we represented the buyer, WITHOUT any Due Diligence fee.  Right now the sellers are in a precarious situation, THEY can however accept back up offers during this due diligence period.  It is a more simplified contract.....it will be interesting on Buyers agents and Sellers agents understanding it.  I think in a buyers market there will not be a lot of buyers willing to put up a fee (at least not our buyers we represent)....and vice versa.   

Dick Beals

Roger, The new offer to purchase has a provision for a due diligence fee, however as defined in 1(i) it is "a negotiated amount, if any, paid by Buyer to Seller..." I just had an offer accepted without a due diligence fee. It is negotiable, and I will continue to practice without offering the fee where it makes sense to do so e.g., the buyer has non-refundable money paid outside of closing i.e., a home inspection.  

Hi Roger - I, too, really like the new NC Offer To Purchase and Contract!  I was involved with 'only' two Alternative 2 Offers in the past and I really like the way each deal was handled.  As you pointed out, we have to be very involved with the lenders now, prior to writing a contract, because they will need to assist us in determining the Due Diligence Period.  I'm looking forward to writing my first 'New' Offer before the end of the month!!!  Good Post!

Roger, I like it, I had a couple of Alt 2's and they worked out OK. I agree with Lenn that it will force the buyers and agents to get their ducks in a row.

Roger, my thoughts! What valuable consideration does the Buyer receive when he hands over a check to the seller? The right to make sure he is not purchasing a lemon, right? And how many times does the seller present to the buyer a recent home inspection report from a reputable home inspector? So the buyer must immediatey come out of pocket for a home inspection before he can feel good about completing the transaction. I think the due diligence fee should be negotiated and only offered when the seller can demonstrate that the home is free of major defects. What the Buyers Agent and Sellers Agent want is a transaction that successfully goes through settlement. Negotiated properly, the due diligence period is probably the best insurance we have that the deal won't fall apart at the last minute.

Roger,

Food for thought.... Why not you as a Buyers Agent (BA, when you first meet buyer prior to viewing any homes) receive a BA retainer fee of say $500.00, to be used as a due diligence fee, when you put a property under contact as their BA, OR you keep the retainer fee if the buyer does not purchase within 6 months??

Dick Beals