Due diligence allows buyers to show they are serious in a competitive real estate market :: WRAL.com
If you haven’t bought or sold a home lately, you might not believe what’s going on.
Realtor Missy Farrell said she’s seeing “multiple offers, lots of showings on homes, high deposits, over-asking prices and sight-unseen offers.”
She recently helped Alana McCall sell her home in Wake Forest. McCall says after just two days on the market, “We had 20 offers.”
Beyond getting multiple offers in a matter of a day or two, the trend catching many by surprise is the way many buyers are hoping to standout: they’re offering large due diligence payments.
The money goes toward the purchase price and is in addition to earnest money paid when signing contract. Experts say sellers look for the payments because it indicates a buyer won’t walk away from the deal. If they do, the seller keeps that money.
“We’ve seen $83,000 in due diligence,” says Robby Oakes, who has almost 20 years’ experience in the local mortgage industry.
“I have some colleagues, real estate closing attorneys, that tell me they’ve seen upwards of $100,000 in due diligence fees. My response was: ‘Things just got real in North Carolina.’”
Much of it depends on price, interest and location.
“When we made an offer on a house in Fayetteville, we actually only did a $500 due diligence fee,” says McCall, adding, “However, you know, a number of the offers that we got were for multi-thousand dollars in due diligence.”
“It used to be $100, $200, $500, and I still remember when $1,000 was you meant business on this contract,” says Oakes.
He acknowledges the mega payments of $80,000 and $100,000 are recent extremes, but adds to mean business now, “I mean we’ve seen $20,000 and $30,000 in the last year.”
Due diligence is not legally required, but in a sellers’ market, experts say it shows a buyer is all in on a particular home.
Oakes says as buyers lose out on homes they want, they’re offering the payments to make sure they don’t lose out again.
This content was originally published here.