Home Buying in 27312>Question Details

Irene LaFort…, Home Buyer in Pittsboro, NC

when a buyer makes an offer on a home, contingent upon passing inspections , does they have to pay a non-refund fee to a seller in add. to a deposit?

Asked by Irene LaFortune, Pittsboro, NC Sat Mar 23, 2013

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The North Carolina contracts offer a buyer what is know as a Diligence period (typically 3-4 weeks in length) for which they pay the seller a nonrefundable fee; typically in the range of $100 - $500 depending on what is negotiated and the price of the property being purchased. This is know as the diligence fee. During diligence inspections are done, financing secured, titled work started, etc. You can see a complete list of what gets done during diligence on the Offer to Purchase and Contract starting at the bottom of page 3 in the section titled Buyers Due Diligence Process.

During diligence a buyer may walk for any or no reason at all and if they do the diligence fee is all the Sellers get. Typically the earnest money deposit is paid the day diligence is over and this is put into a trust account. not given directly to the Seller. The Earnest money deposit can be tendered up front but there's really no reason to do so. Closing usually takes place within 10-15 days after the diligence expires. If you do buy the property the diligence fee is credited against the purchase price.

You should have had all of this explained to you buy your agent, when you first met them, if they did not do this I would suggest you are working with an inexperienced poorly trained agent. I hope you are working with a buyer broker and not counting on the sellers agent, allowing one agent to work both sides of a transaction is a terrible idea. There's clearly a conflict of interest (even though the state allows it) and the only person who has good representation in dual agent is the agent, the buyer and seller are essentially thrown under the bus and left to fend for themselves as best they can.
1 vote Thank Flag Link Sun Mar 24, 2013
So even if a 'defect' is discovered during the due diligence period (e.g., land won't perc, or a serious structural problem is discovered), then the seller gets to keep the money? or is it applied to the purchase price? if the seller gets to keep the money even if a defect is found, this seems very unfair, (esp., as the buyer has already had to pay inspection fees!) - Didn't it used to be the case that earnest money was all that was used, then it was forfeited if the buyer backed out for any reason other than a defect being found? this seemed to be some protection to both parties, incl the buyer, who has invested time and money, him/herself.
Flag Sat Apr 20, 2013
Everything is negotiable; however, the North Carolina Offer To Purchase provides for a Due Diligence Period during which the buyer must make all inspections. The seller expects a non- refundable fee in return. This fee does go into the buyer's closing funds. There is also the traditional earnest money deposit which is refunded if the buyer gives notice that he is not going ahead with the purchase before the end of the Due Diligence Period
0 votes Thank Flag Link Sat Mar 23, 2013
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