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Residential Contract Due-Diligence Period..Pay Attention

By
Real Estate Broker/Owner with Cam Realty and Property Management

Residential Contract Due-Diligence Period..Pay Attention

The due-diligence period in a real estate residential contract is set forth at the time of acceptance. Until the contract is executed the buyer and the seller can negotiate(or not) the timeline for the home inspection.

Buyer is obligated to perform the home inspection within the time period, if, for any reason that is not possible, the buyer may ask for an extension for the home inspection, however, the seller does not have to grant the extension. If they pass the due-diligence period and either ask for repairs or to cancel the contract as a result of the inspection, they may lose their escrow deposit.
It’s important to pay attention to these dates and calculate them correctly.
For example, if the buyer has three days to make the escrow deposit and the contract was executed on Thursday, July 19, 2018, buyers will have until the first business day to make the escrow deposit which will be July 23, 2018. Florida uses business days to calculate the time periods for Residential contracts and calendar days for Commercial Contracts.
Once the home inspection is completed, if there are any defects, the buyer may ask the seller;

-To make all the repairs(usually by licensed professionals)
-Buyer and Seller may negotiate on the repairs
-Buyer may cancel the contract and receive his/her escrow deposit as long as the home inspection was performed within the time period which was agreed on and communicated back to the seller within the time period if the buyer is looking to cancel the contract

What happens if the buyer waits until the last minute to get a home inspection and asks to cancel the contract after the due-diligence period?
Buyers and their agents must pay close attention to the dates that are on the contract as they are there for a reason. If not followed, one party is going to lose some money.

Buyers can cancel the contract, however, if they missed the deadline for the due-diligence period, they may lose their escrow deposit.

As Realtors, we have to look out for the best interest of our clients, that starts with paying close attention to the dates that are outlined in the contract.

Once there’s an executed contract, the very first thing I do is to put all the important dates on a calendar and follow up with the cooperating agent to ensure they’re met.
Please remember, contracts can calculate time differently. Whether you are the seller or the buyer, be sure to read the contract so you don’t miss any of the deadlines that are set forth.

If you are a Clermont FL homeowner thinking about selling your house or looking to buy a home, I would love to earn your business. Call or text me at 407-929-1852 or visit www.WhereToLiveInOrlando.com

Residential Contract Due-Diligence Period..Pay Attention!

 

Comments (10)

Gayle Rich-Boxman Fishhawk Lake Real Estate
John L Scott Market Center - Birkenfeld, OR
"Your Local Expert!" 503-739-3843

And property disclosures are one of the main reasons why people have disputes, so those need to be timely and fully filled out to the best of the seller's ability as well. I bring those to the home inspection as it can sometimes be a guideline and/or offer answers to questions buyers and the home inspector may have. As well as getting them signed by the buyers hopefully! 

We have GOT to watch these deadlines like a hawk for our clients. And sometimes we run into agents who don't pay attention and have to be prompted. 

It ain't easy being us!! 

Jul 18, 2018 04:23 PM
Kathy Streib
Cypress, TX
Home Stager/Redesign

HI Beth- this is such good information buyers because missing a date can really cost them a lot!!!  This is why you hire the very best agent who knows this and has systems in place to guide you through this process. 

Jul 18, 2018 06:43 PM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

I think this is good that they lose their earnest money. In California, they do not. As long as they don't physically remove the contingency, it stays in place, sometimes all the way to closing.

Jul 18, 2018 06:50 PM
Beth Atalay

Hi Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents, they can lose their earnest money but most sellers let it go. I wouldn't take the chance though. 

Jul 19, 2018 06:42 AM
Wayne Zuhl
Remax First Realty II - Cranford, NJ
The Last Name You'll Ever Need in Real Estate

Good post. I think it's a great idea to put all relevant dates in writing.

Jul 19, 2018 05:53 AM
Beth Atalay

Good morning Wayne and Jean Marie Zuhl, putting all the important dates on a calendar then, follow up is a good thing. 

Jul 19, 2018 06:34 AM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Beth dates on a sales contract whether they be for inspections, commitment, or closing are very important and close attention needs to be paid to them.  Missing those date can prove to be expensive.

Jul 19, 2018 09:39 AM
Brian England
Ambrose Realty Management LLC - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

One of the most important time frames throughout the contract, one needs to find out for sure what they are getting into, whether it be good or bad.

Jul 19, 2018 11:35 AM
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By Real - Alexandria, VA
Alexandria Virginia Homes For Sale

Beth, the deadlines in contracts are so important. What a great topic and your post is very informative. Waiting until the last minute is never a good idea when it comes to real estate contracts. 

Jul 20, 2018 05:26 AM
Beth Atalay

Hi Amanda S. Davidson, some think the dates in the contracts don't have any meaning as long as they're moving forward and learn it the hard way. 

Jul 20, 2018 06:44 AM
Debe Maxwell, CRS
Savvy + Company (704) 491-3310 - Charlotte, NC
The RIGHT CHARLOTTE REALTOR!

This is how we operate in NC too, Beth and that end of DD is a critical time for me, as a buyers' agent. I make sure we are on-target with all of our dates too!

Great explanation of the Contract, Beth! Happy Friday!

Jul 20, 2018 07:55 AM
Lawrence "Larry" & Sheila Agranoff. Cell: 631-805-4400
The Top Team @ Charles Rutenberg Realty 255 Executive Dr, Plainview NY 11803 - Plainview, NY
Long Island Condo and Home Specialists

Here we have the home inspection usually 3 days after an accepted offer. If everything is ok with the inspection, we go directly to contract...

Jul 20, 2018 10:19 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Hi Beth... that's pretty much how it works in North Carolina, as well. I like it... one critical date to remember versus the old days when there were different dates for different contingencies. But we use calendar days, not business days. And you didn't mention a due diligence fee that the buyer pays the seller and forfeits if they pull out of the contract during the due diligence period.

Jul 21, 2018 01:02 PM