It’s common in most state Offers to Purchase for earnest money to be paid by the buyer at the time of the contract. North Carolina is the same. However, there is another type of money that is also listed in North Carolina’s Residential Offer to Purchase. That’s due diligence money.
This residential offer form 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. This period of time is called the due diligence period. There is no industry standard or required amount for a due diligence fee. In a buyers’ market, most sellers will enter into a contract with little or no non-refundable due diligence money. In a sellers’ market, a seller may want thousands of dollars in non-refundable due diligence money. That’s even more likely when there is more than one offer.
During this due diligence period, if you find something you do not like about the property, or you cannot obtain a loan to purchase the property then you can void the contract and get your earnest money back. In fact, you have the right to terminate “for any reason or no reason” during that due diligence time. That’s what North Carolina’s offer to purchase says! Great values are snapped up quickly in just about any market. If you like what you see from the pictures, then you might want to move quick. Already understanding this form can save you time.
What happens When Due diligence is over?
After this period of time 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. Since getting a loan is usually takes the longest, ask your lender how long they will need for you to receive loan approval. That way you are sure not to run out of due diligence time.
If you would like a sample copy of North Carolina’s Offer to Purchase, then please contact us. Also please feel free to contact us if you have any other questions regarding Outer Banks real estate feel free to check out our website!