Due Diligence - The What & The Why

    I meet with just about every buyer I work with prior to going out and showing any homes.  I want to make sure that we are all on the same page in terms of what they are looking for in a home so I get a better picture of what a home needs to have to make it right for my buyers.  We go over the buying process and I make sure they are clear on the expectations for what is ahead. I give the buyers plenty of time to ask any and all questions they may have. No matter if I am working with first time home buyers, or if I am working with people that have owned homes before, I always need to take some time when I get to the part about the "Due Diligence Period and Deposit".

    The Due Diligence Period is a negotiated amount of time within the contract. Typically in the greater Raleigh area, we see this period to be somewhere around 2-3 weeks on average. During this time, the buyer's real estate agent or partner is going to work hard to coordinate all of the inspections that are needed on the home in order to get the results back in quickly and allow enough time in order to negotiate any repairs with the sellers that may be needed before the Due Diligence period ends. The buyer pays for this time period with a Due Diligence deposit in order to have access to the property and the ability to perform their inspections and investigations. The Due Diligence deposit is non-refundable to the buyer (unless you make it to the closing table) and is the sellers "insurance" against the buyer just walking away from the deal for no reason.

    Most of the time, home buyers are getting home inspections, termite inspections and radon inspections conducted during the Due Diligence period.  The mortgage lenders are ordering appraisals and getting the loan processed and working through underwriting. If a home has a private well or if it has a septic tank, these are other investigations that the buyer may choose to have done.  Some loans require that if a home has a septic tank and/or private well that they be inspected and tested. Depending on the age of the home or the HVAC unit, a buyer may choose to have the HVAC inspected more thoroughly than what the home inspector might cover. They may want to have a licensed HVAC professional come in and go through the system to make sure it is working properly. When negotiating the contract, it is very important to consider all of the potential inspections a buyer may want to have conducted on the home so to make sure you give yourself enough time to get them done and negotiate with the seller any repairs that may be needed based on those findings.

In the crazy market we are in here in the Triangle (Raleigh, Cary, Apex, Holly Springs, Wake Forest, Fuquay Varina,...) often it is more pleasing to sellers to see a shorter Due Diligence period or to have a much larger than "typical" diligence deposit put down.  These are understandable as a seller, but as a buyer's specialist, it is my job to protect the buyer and to make sure they understand what is possible during a short diligence period. As long as the buyer is aware of their options and the possible consequences of those choices, then I have done my job.  

If you are looking to buy a home in the Triangle area and you have questions about what is ahead of you, give our team a call. We are here to help and would love to do so. Don't go into purchasing a home blind!! Be informed, ask a lot of questions and have an initial consultation meeting with your agent so you can get your questions answered upfront and a lot of the details can be explained to you before you get started.  You wouldn't take off on a long trip in the car and expect to end up at your destination without ever knowing where you were going or how to get there. It is the same with real estate.

Chad Wingler Lead Buyer Specialist chad@peterkima.com 919-300-5421