The residential offer is similar to commercial contracts where buyers pay for a period of time to reserve the property. During this time the buyers should complete all their inspections and determine if they can get a loan. There is no industry standard or required amount for a due diligence fee. However, right now the good news for buyers is that most sellers are accepting next to nothing for taking their property off the market during this due diligence period. As the market turns to favor sellers expect this to change.
During this due diligence period, if you find something you do not like about the property or you can not obtain a loan to purchase the property. Then you can void the contract and get your earnest money back. In fact, the contract states that the buyer has the right to terminate “for any reason or no reason” during that due diligence time. Great values today are snapped up quickly. If you like what you see from the pictures and your Realtor thinks it meets your criteria. You might consider making an offer sight unseen. Once you are able to see the property if you do not like what you see then you can void the contract.
What happens if you miss this period?
After this period is over your options to void the contract and get your earnest money back become extremely limited. Therefore it is important to make this period of time long enough to get your loan approval. Ask your lender prior to making the offer how long they will need for you to receive loan approval. That way you are sure not to run out of due diligence time. Next time you meet with your Scott Team Realty agent ask them for a draft copy to look over.
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