In NC we have a new "Offer to Purchase Contract" effective January 1 2011. It comes with a few changes for us and before I had used the contract I was really not looking forward to using this new contract. I am OK with "new" and I like change..but this contract seemed to be weird, strange, maybe even silly. That was until I wrote one and discussed it with my buyer. You see the new NC offer has wording like "due diligence"! They wanted buyers to pay for this due diligence period and write two checks to two different people. They (the NC real estate commission) wanted people to loss money for walking away from a deal. Wait maybe that is OK..Yeah that might make buyers think twice about being dumb and walking away.
OK so here is how it works; look at the outline below
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*________________________________*---------------------*
Offer Due Closing
Signed Diligence (Settlement)
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The left * starts the deal with everyone signing the contract.
The solid line ___ is the due diligence period (a negotiated period of time that the buyer pays the seller for directly at the time of offer), the buyer pays for this time, the seller can not sell the home during this time, and the buyer can walk away for any reason or no reason during this time, the buyer holds all the cards during this time! If they buy the home the fee is given as a credit. The buyer must do inspections, appraisals, etc during this time.
The middle * is the due diligence date (end of the due diligence period), why is this date important? ONLY if the buyer has money on both sides of this * The date can be up to closing and is a very important date. After this date if the buyer walks away they now will forfeit their Earnest Money (Due diligence money is paid to the seller and Earnest Money goes in the listing agents escrow account)...PLEASE UNDERSTAND FOR THIS DATE TO BE IMPORTANT THERE MUST BE MONEY ON BOTH SIDES OF THIS *
The ---- line is the waiting period...the buyer is done..if they walk away now they will forfeit both Earnest Money and Due Diligence money. My opinion is that this line should be short, the buyer wants it to be short on the right and long on the left, the seller wants it to be short on the left and long on the right.
A few thoughts:
-if the property is older or looks like it may have inspections issues the buyer would want as low as possible due diligence money
-The seller needs something for their time, someone taking their home off the market for 6 weeks for free is not a good idea
Any thoughts?
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