What is "Due Diligence?"
Due Diligence...what does this mean?! In North Carolina, an Offer to Purchase contract can include "Due Diligence" as an opportunity for the buyer to have time to further investigate a property. This will be spelled out as a period of time in the offer to purchase contract and should allow for a buyer to have ample time to conduct any and all inspections of the property, as well as a survey, an appraisal, title search, loan qualification and application. Inspections can include, but are not limited to, pest, septic, home, pool, and any other specific systems inspections. The amount of time that Due Diligence lasts is negotiable, so make sure you allow enough time to schedule with any professionals that you will need to complete inspections and services.
During this time of Due Diligence, a buyer should find out any additional information which may affect their desire to continue with the purchase of the property. A buyer can back out of the purchase at any time during the due diligence period, for any reason or for NO REASON at all. The due diligence fee is an amount paid to the seller for the time to gather information. This is typically not refundable. If a buyer terminates the contract during due diligence, the seller keeps this fee.
Before the due diligence period ends, if there are repairs the buyer can negotiate with the seller to see what if any repairs the seller will be willing to make. The seller is not required to make repairs, but during due diligence the buyer has the ability to terminate the contract during this time if a resolution can not be made.
Near the end of the due diligence period, the buyer must decide if they wish to proceed with the purchase or to terminate the contract. This needs to be decided prior to the expiration of due diligence to avoid putting earnest money at stake.