Is $1k a fair due diligence fee? (loans, how much)
Raleigh, Durham, Chapel Hill, CaryThe Triangle Area
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I probably wil never allow 30 days DD again..It's a long time to have your house off the market, with very little investment by the buyers..
If my buyers wanted 30 days I would require twice what I would ask for 2 weeks..Probably 750 to 1000.
Why not just do 2 weeks DD, get those inspections & appraisals done fast and move into the
post DD period after that ??
Depends on how ready the seller is to sell.
I think a shorter DD is ok.
Then again, I'm not entirely fond of DD periods. I think I preferred the old method of dropping your earnest into escrow, and having a way out if something on either side goes awry.
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I probably wil never allow 30 days DD again..It's a long time to have your house off the market, with very little investment by the buyers..
If my buyers wanted 30 days I would require twice what I would ask for 2 weeks..Probably 750 to 1000.
Why not just do 2 weeks DD, get those inspections & appraisals done fast and move into the
post DD period after that ??
With all the paperwork involved, lenders/processors/underwriters need about 3 weeks to really get the loan commitment. I do try to get 4 weeks due diligence period if I have the buyer, just so we don't have to rush. When I have the sellers, I like 2.5 to 3 weeks due diligence period. And, of course, when I have the sellers, I like to get more due diligence money, as well!
Sometimes I find that appraisers are so busy that it takes a while to get them to the house, as well.
Keep in mind that although it SEEMS that the buyer doesn't have lots of "skin in the game" during the due diligence period, the buyer is paying for inspections ($350 to $500) plus the appraisal and credit check ($350), etc.
With all the paperwork involved, lenders/processors/underwriters need about 3 weeks to really get the loan commitment. I do try to get 4 weeks due diligence period if I have the buyer, just so we don't have to rush. When I have the sellers, I like 2.5 to 3 weeks due diligence period. And, of course, when I have the sellers, I like to get more due diligence money, as well!
Sometimes I find that appraisers are so busy that it takes a while to get them to the house, as well.
Keep in mind that although it SEEMS that the buyer doesn't have lots of "skin in the game" during the due diligence period, the buyer is paying for inspections ($350 to $500) plus the appraisal and credit check ($350), etc.
Vicki
Yup. We probably spent over a grand on inspections and loan stuff. We got extra inspections, just to be safe. We knew the sellers would be unable/unwillling to complete repairs.
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Sometimes I find that appraisers are so busy that it takes a while to get them to the house, as well.
Vicki
That's because there are fewer of them...I know someone in the appraisal business. Due to increased government regulations and required paperwork plus banks and lenders reducing their appraisal fees paid to appraisers although the borrower is still being charged full price, many appraisers are turning down low paying work or getting out of the business altogether. Becoming a licensed real estate appraiser is a long and difficult process that takes several years and it's getting to be not worth the effort for new appraisers.
Then again, I'm not entirely fond of DD periods. I think I preferred the old method of dropping your earnest into escrow, and having a way out if something on either side goes awry.
Back when I bough my house in 1996, there was no such thing as DD fees at least I never paid any. So where's the recovery for the buyer's lost time and money spent if the seller decides to back out of the deal?
DD fees seem to be one-sided in favor of the seller to me.
Back when I bough my house in 1996, there was no such thing as DD fees at least I never paid any. So where's the recovery for the buyer's lost time and money spent if the seller decides to back out of the deal?
DD fees seem to be one-sided in favor of the seller to me.
Seller breach allows the buyer to recover DD Fee, EMD, all inspection expenses, loan fees, legal fees, etc.
That remedy is built into the NCAR contract, unlike the DD Fee, which is only mentioned.
Seller breach allows the buyer to recover DD Fee, EMD, all inspection expenses, loan fees, legal fees, etc.
That remedy is built into the NCAR contract, unlike the DD Fee, which is only mentioned.
Eh. It's all civil court. If we had legally backed out of buying our house, we likely would never have gotten a dime back. Our sellers were divorcing and broke.
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Eh. It's all civil court. If we had legally backed out of buying our house, we likely would never have gotten a dime back. Our sellers were divorcing and broke.
You would not expect to have that recourse as a buyer terminating. That remedy is reserved for buyers when the seller breaches.
That was our fear. We were out money. Had to keep extending the contract because sellers could not produce a clear title.
We could have walked each time the contract ran out, but we liked the house and feared never recouping our losses.
Failure to offer insurable and marketable title is so obviously a seller breach.
One of the admirable reasons the Forms Committee, Bar Association, and NC REC went for the current format was to attempt to prompt buyers and sellers to actually attempt to prepare for the transaction.
I would say we have seen mixed success in that area.
Buyers are getting a bit better about sourcing loans prior to contract.
Sellers are too often still playing the caveat emptor card and feigning innocence. Getting into a stronger sellers' market is not helping.
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