Here is some info on something very unique to NC real estate deals, the Due Diligence Fee.
1. Due Diligence: What Is it?
Introduced in 2011, due diligence money is a fee paid directly to the seller in a real estate transaction and is immediately paid after the execution of the contract. This is not a set fee but rather one that is decided upon with guidance from your real estate agent based on current market conditions and demand for that specific property. It can be $0, but if competing with other offers, your offer will be weak by comparison. A due diligence fee of $3000-$5000 is typical for a transaction under $1m, this is just an example, all due diligence fees are negotiable.
2. Due Diligence Period:
With the acceptance of your due diligence fee, you then enter into what is referred to as the due diligence period, where the house is officially taken off the market. This is an amount of time agreed upon in the contract but typically ranges from 10-21 days to allow time for the buyer to get inspections, etc. Essentially, due diligence fees pay for the time it takes the property off the market.
3. Due Diligence Fees Are Guaranteed Money For The Seller
It is important to note that due diligence fees are non-refundable, assuming that the seller follows through with their promises in the contract. If a buyer decides to terminate the agreement, they will forfeit this money. Once given to the seller, the money is deposited and will not be returned. If a buyer refuses to hand over the due diligence fee because they no longer want to buy the home, the seller can seek legal action against them to collect the funds.
In the rare instance that a seller cannot hold up their end of the contract, the money can be refunded to the buyer, but this is highly uncommon. When this situation does occur, it is usually due to extenuating circumstances such as the property being destroyed before closing or a title issue being revealed that cannot be resolved before closing.
Assuming all goes well with your inspections, appraisal, etc., and you reach the finish line (closing) the Due Diligence fee is credited to you on the closing statement, it remains “your money”, it only gets forfeited if you back out of the transaction.
All of the above is separate and different from the Earnest Money (aka Binder) Deposit.
As a final note, there is typically NO Due Diligence fee required when purchasing a brand new home. So, in addition to my earlier post about the lack of inventory and the advantages of buying new construction, you can now add this to the list of reasons to consider a new construction home purchase.
Finally, don't forget about Your Choice Realty's 1% buyer's rebate offer on new construction purchases.
Contact Phil Jones at 828-820-4171 or Realtor.PhilJones@gmail.com for more information on this topic, or assistance with real estate in the Asheville NC area.
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