Know the Key Terms of the Contract

What is“Due Diligence”? “Due Diligence” is the buyer’s opportunity to engage in a process of further investigation of the property and the transaction as described in the Offer to Purchase form within a period of time agreed to by the seller and buyer.

What might the buyerinvestigate during “Due Diligence”? The buyer will want to inquire about anything bearing on a decision to either move forward with the contract or to terminate it. Paragraph 4 of Form 2-T outlines many, but not all, common considerations of the “Due Diligence” process such as home, pest, and septic inspections, property survey, appraisal, title search, loan qualification and application, repair negotiation, etc.

How much time isallowedfor the “Due Diligence” Process? The amount of time is negotiable, but the period begins with the effective date of the contract. Buyers should be certain to negotiate enough time to fully complete their inquiries – especially as related to appraisal and loan approval and any repairs discovered during property inspections.

What isthe “Due Diligence” Fee?The fee, if any, is negotiated and paid by the buyer to the seller for the right to conduct “Due Diligence”. The amount of the fee may be influenced by such matters as the market for the property, number of days on the market, personal circumstances of buyer and seller, and the length of the “Due Diligence” period.

Isthere alimit tothe repair items the buyercanaskthe seller toperform? No. The buyer is free to ask for any number of things; however, the seller is not obligated to agree to any of them. Repairs, if any, are completely negotiable.

Ifthe buyer isnotsatisfiedwiththe seller’s response, orlackthereof, torepair requests, what can the buyer do? The buyer can terminate the contract or agree to move forward without the repairs.

Must the repairs becompletedbythe sellerbefore the end ofthe“Due Diligence” period? No, but the seller is required to complete any repairs in a good and workmanlike manner prior to the settlement date. Failure by the seller to complete the repairs could result in a breach of the contract.

Must theseller allow thebuyer toinspect the property toverifythe repairshave beencompleted even if the “Due Diligence” period has expired? Yes. The buyer has the right to verify the repairs have been completed satisfactorily, during or after the “Due Diligence” period. The buyer also has the right to do a final walk-through. The seller’s failure to permit the buyer to verify repairs or to do a final walk-through is a breach of the contract. What happens atthe endofthe “Due Diligence” period? The buyer must make a decision to move forward with the contract or to terminate, so it’s a good idea to discuss progress with the buyer as the end of the period approaches. There is a “Warning” to the buyer advising termination if the seller does not agree to a requested extension of the “Due Diligence” period. The buyer’s loss of the right to terminate for any or no reason then places the earnest money at stake. To avoid any misunderstandings, provide any extension agreed to by the seller to the buyer in writing.

Ifthe buyer decidestoterminatethe contract underthe “Due Diligence” clause, must theseller agree? No. It is the buyer’s sole decision to make, assuming it is made during the “Due Diligence” period and not afterward. The termination is a notification to the seller, and must be in writing, but the buyer does not need the consent of the seller. It is a unilateral decision made by the buyer for any reason or no reason at all. The buyer typically gets back the “Earnest Money” but not the “Due Diligence” fee, unless otherwise negotiated.

It's not impossibleto sell a home on your own, 7% of recent home sales were FSBO sales this past year.

That being said, if you have questions along the way, please just give me a call. I can answer your questions, no charge, no obligation, that's even if you get an offer, you can reach out with questions you need answered. If you decide that you'd like to list your home with an agent, I would love to have an opportunity to apply for the job. We can discuss all your concerns and objectives during a free no-obligation homeowner consultation.

Keepingupwith the ever-changing contracts and attorney-drafted forms.

(EXAMPLES POSTED BELOW)

Seller Lease Backs...with and without fees.

Term of Possession. Seller may remain in possession of the Property for a period of ___ days after the Closing (insert a number of days) until 5 p.m. on the last day (the entire period including any extension agreed to by Buyer and Seller in writing is referred to as the “Term”). TIME IS OF THE ESSENCE with regard to the end of the Term.

Appraisal Waivers

Purchaser has made an informed and educated decision to offer an amount greater than the list price of the property. Seller agrees to accept said offer under the following conditions: If the property does not appraise for the amount of the Offer, Purchaser acknowledges that s/he will be required to pay the difference of the appraisal and the purchase price in cash, notwithstanding any other lender requirements.

Personal Property Purchases

(1)Living Rm furniture: Two couches/Two chairs/Two end tables/ Wall art/ Rug and the basketball hoop.The Seller warrants that the property is being transferred to the Buyer free and clear of any liens and encumbrances. The above property is sold on an "AS IS" basis. The Seller makes no warranties, express or implied (except as specifically stated in this document).

MiscellaneousContract Items to Consider

Through the years, our contract and terminology has changed significantly, to include immediate transfer of the Due Diligence fee, the Due Diligence fee itself and what it entails, Earnest Money, Internet and Home Electronics, Personal Property vs. Real Property, AS-IS, Cash Offers, Proof of Funds, Lender Stipulations, Ribbon Backed Offers, Home Inspections, Due Diligence Repair Request, Time is of the Essence, CounterOffers, and What Stays with the Property-What doe not.

You may have hired an attorney to draft and oversee your contracts, but a home buyer will typically want to work with a lender, an attorney & a Realtor representing only their interests.

The Due Diligence Fees (as shown below) are Non-Refundable. The Seller deposits the Due Diligence Fee into their bank account. If it doesn't close, the Seller Keeps the Money. If it closes, it is credited back to the buyer at closing. Real Examples Shown Below:

Today's Bidding Wars: Most contract winners have won by having the highest Due Diligence fee, coupled with other appealing conditions geared towards the seller's desire.

Representation: 87% of Home Buyers hire a Realtor (Buyer's Agent); 7% of Home Buyers will work directly with a builder's site agent; 90% of home sellers hire a Realtor.

*Stats are provided by the National Association of Realtors - Profile of Home Buyers and Sellers