New Offer to Purchase Real Estate Contract

Effective January 1st of this year, there is a new offer to purchase contract in the State of North Carolina.  Here's how the new contract works:

Once the seller's home goes under contract, a due diligence period is agreed upon, (normally 30 days) during which time the buyer inspects the property and arranges for financing. So far, we are seeing a non-refundable deposit typically between $200 -$500 being given to the seller from the buyer during due diligence.

Since it is in the buyer's best interest to have financing approved within the due diligence period, it is helpful for the buyer to be fully preapproved prior to going under contract.  The lender will then only need to appraise and approve the property during the due diligence period speeding up the whole process. 

The buyer has an opportunity during the due diligence time to thoroughly inspect the property and arrange and complete various inspections.  The types of inspections almost always include a general home inspection, pest inspection, and radon inspection.  The buyer can also bring over general contractors to bid on changes the buyer wants to make after purchase or perhaps arrange for a painter to give the buyer a bid on new colors.

After completion of the inspections, the buyer is then able to fully evaluate the property and either come to an agreement with the sellers on repairs or exercise the option to terminate the contract. With the additional flexibility of this contract, the buyer can choose to back out for any reason during the due diligence period.  In that case, of course, the buyer loses their due diligence fee previously paid to the seller.

From the seller's perspective, the new contract requires the buyer to begin and complete the evaluation process in a reasonable time.   Typically during the due diligence period, the buyer spends approximately $700 for home, radon and pest inspections.  Then, if the buyer wants to move forward, an appraisal fee (~$400) is required along with a property survey (~$350).  Consequently, the buyer has invested significant time and money in the process. 

When the due diligence period ends, the buyer commits to moving forward with the settlement date or backs out of the contract.  So far, most of the buyers are moving forward with their contracts.