All Forum Posts by: Ray Malave

@Ray Malave Yes, you should so you can have the right to back out of the deal if it does not work out as you plan.

In Texas, we typically do 5 to 7 days at $30 per day so for 5 days, it will be $150.

This is real estate any everything is negotiable.

Goodluck

@Ray Malave

One beauty about real estate is how fluid and different it is by location. Out-of-State investors who invest in North Carolina (as an example) are perplexed by NC having both a Due Diligence and an Earnest Money deposit. (DD is non-refundable and goes directly to the seller regardless of whether the deal closes or not....EM is held in escrow and is refundable during the DD period). If you choose not to include DD in your offers to purchase in NC, you'll have a much lower conversion rate than if you do offer DD. Your worst case scenario is that you go under contract, terminate the contract, and forfeit your DD money. Now.....put yourself in the shoes of the seller. If you have two comparable offers and one provides DD $ and one doesn't, what would you do? Hope this helps.

@Ray Malave

It appears the NC real estate contract has a built-in due diligence period under paragraph 10 (Property Condition) that allows for termination after inspections if you and seller cannot reach an agreement over repairs. 

Since contingencies are not allowed in a contract under NC law, could we consider that the Due Diligence fee creates a way to place a kind of contingency on the sale? If the sale goes through, the Due Diligence goes toward the purchase price but provides a way out or a way to renegotiate the price if an inspection comes back with issues.

@Guy Gimenez

Its amazing. I keep learning something new every time I check out this forum.

Thanks

Each state contract form is different. Earnest money is typically deposited with the title company to indicate you're serious about purchasing the property while your due diligence funds (called Termination Option Fee in my State) may allow you time to get inspections, etc. on the property and either renegotiate the terms or terminate the contract if you don't like what the inspectors found. Due diligence and earnest money are not synonymous and have two completely different functions in a contract. 

 If he's in Texas or North Carolina he should. Otherwise hed never get a contract.

 No