Idiosyncrasies of different markets

[Susan Wang]

Good morning! I am a new investor and after picking the Charlotte market and learning about the due diligence fee, I was wondering what other nuances there are for other markets that are specific to that market and not real estate in general? For example, the LLC transfer fee for Florida. Things to keep in mind when evaluating other markets to invest in. Thanks!

[Susan Wang]

Originally posted by @Mitch Messer:

Hi @Susan Wang and welcome to BiggerPockets!

For those of us unfamiliar with the concept, can you please explain what a due diligence fee is?

Hi Mitch!

Sure thing, this concept was also new for me. It’s basically a fee that is negotiable that you place with your offer, instead of contingencies, and is non refundable if your offer is accepted. It allows you as a buyer to do an inspection, appraisal, etc. You can walk away from the deal before end of the due diligence period regardless of the reason, but you will lose the money.   If you go ahead with the offer, the fee is applied as credit towards purchase of the home.  In other markets you can lock up an offer and then during inspection you can walk away using a contingency without losing any money. A higher due diligence fee can make your offer more attractive, but obviously this is risky and also takes away some of your power during inspection for negotiation (the seller knows you have more to lose and may be less willing to negotiate).