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He wouldn't, but he would if it's $10,000 (on top of the $10,000 DD). Don't disregard the reality that there is a lot of misbehavior going on in this market. I talk to member of the legislature who was surprised to learn about the DD situation going on in the state. He may consider offering a bill that would curb some of the problems that the Real Estate Commission is permitting. The level of willful ignorance that sellers are practicing (checking "NR" on the disclosure form) is circumventing the protections that the existing regulation were designed to minimize or avoid.
A year ago, there were 6,000 houses on the market. Now there are 2,000. That's where a lot of the price pressure is coming from. Whether there are going to be defaults from COVID or whether there is going to be a recession (or worse) is speculation, but it is based on history.
It's the perfect storm right now, low interest rates + pandemic. Maybe it's a good thing for your son to take a break. Just sit tight and see what fall brings. Hopefully people will be mostly vaccinated by then, they can spend time outside and that would create a different housing dynamic (maybe they'll hate what they've recently bought, or fall in love with their old house again, or maybe they'd think suburbia (or urban core) isn't for them anymore). We also do not know how the WFH scenarios pan out. Feds promised not to hike the interest rates until 2023, so hopefully your son will still have a chance to borrow cheaply.
I don't see where you identify any particular "scam."
What would the real estate commission do, and why?
For starters, the due diligence fee should be refundable if the seller (or her agent) has concealed or failed to disclose problems with the property. Second, the concept of disclosure statements needs to be revisited. The last ones I've seen all have "no representation." That makes the form a seller shield instead of a document that helps the buyer make an informed decision.
Absent legislation, maybe first-time buyers need to be educated as to what to expect from ethical and competent real estate agents acting as buyer's agent. If the buyer's agent artificially pumps up the due diligence to get a quick sale, maybe the buyer's agent should be on the hook for the fee if something goes wrong that is not the fault of the buyer.
I'd settle for making due diligence illegal. We survived for hundreds of years without it.
For starters, the due diligence fee should be refundable if the seller (or her agent) has concealed or failed to disclose problems with the property. Second, the concept of disclosure statements needs to be revisited. The last ones I've seen all have "no representation." That makes the form a seller shield instead of a document that helps the buyer make an informed decision.
Absent legislation, maybe first-time buyers need to be educated as to what to expect from ethical and competent real estate agents acting as buyer's agent. If the buyer's agent artificially pumps up the due diligence to get a quick sale, maybe the buyer's agent should be on the hook for the fee if something goes wrong that is not the fault of the buyer.
I'd settle for making due diligence illegal. We survived for hundreds of years without it.
So, you make a DD Fee illegal. I know you meant "Due Diligence Fee," not "due diligence," right?
Fine. You go to buy in a hot market and I go to buy the same house. You offer no skin in the game, and I willingly toss down an EMD with a nonrefundable offer. I just didn't call my nonrefundable dollars a "DD Fee," because that would be illegal.
All else being the same, you lose. I win. Every single time.
DD Fee is not an issue. Sellers market is the issue.
We have had options and nonrefundable money as market possibilities for all of eternity.
So, you make a DD Fee illegal. I know you meant "Due Diligence Fee," not "due diligence," right?
Fine. You go to buy in a hot market and I go to buy the same house. You offer no skin in the game, and I willingly toss down an EMD with a nonrefundable offer. I just didn't call my nonrefundable dollars a "DD Fee," because that would be illegal.
All else being the same, you lose. I win. Every single time.
DD Fee is not an issue. Sellers market is the issue.
We have had options and nonrefundable money as market possibilities for all of eternity.
Yes, I meant due diligence fee. As far as the name game calling a due diligence fee an EMD with a nonrefundable offer, any well-drafted statute or regulation would circumvent that gamesmanship. It would not say, "Due diligence fees are prohibited." It would say something like, "Any advance payment of any form received by the seller as part of the purchase transaction shall be refundable. Violation of this statute by the seller (or his agent) is punishable as a Class III misdemeanor." The terms and conditions under which the advance payment is refundable need to be clearly spelled out. I'm not suggesting that the buyer be able to dictate all of the terms. I am suggesting that unscrupulous sellers and their agents (particularly high-volume sellers, such as flippers) should not be able to use their knowledge and experience to screw innocent and vulnerable home buyers out of their money.
The seller (and his agent) has far superior knowledge of the conditions of the home. They should be held responsible for that knowledge, like they are in most other commercial transactions. (See the Uniform Commercial Code as it applies to implied warranties.) The buyer gets to see it for 30 minutes (hopefully) and decide whether to gamble on the honesty of the seller (and his agent.)
I was hoping you would comment on the NR designation.
ETA: Mike, I'm not arguing with you, but I am sick of the little guy getting screwed to the wall. I'm confident that you, at least to some extent, feel the same way.
So, you make a DD Fee illegal. I know you meant "Due Diligence Fee," not "due diligence," right?
Fine. You go to buy in a hot market and I go to buy the same house. You offer no skin in the game, and I willingly toss down an EMD with a nonrefundable offer. I just didn't call my nonrefundable dollars a "DD Fee," because that would be illegal.
All else being the same, you lose. I win. Every single time.
DD Fee is not an issue. Sellers market is the issue.
We have had options and nonrefundable money as market possibilities for all of eternity.
To-may-to, To-mah-to.
I think there is a valid rationale in reexamining the contracting rules for home purchases, and a hot market has shed light on that. Something like limiting non-refundable money to a % of purchase price.
As far as the name game calling a due diligence fee an EMD with a nonrefundable offer, any well-drafted statute or regulation would circumvent that gamesmanship. It would not say, "Due diligence fees are prohibited." It would say something like, "Any advance payment of any form received by the seller as part of the purchase transaction shall be refundable. Violation of this statute by the seller (or his agent) is punishable as a Class III misdemeanor.".
So if I'm selling my house and you make an offer. You give me a deposit that is 100% refundable. My house us under contract and effectively off the market. You change your mind 4 weeks later and I've got nothing? No way is that acceptable.
I sympathize with your son. But I still don't see where there is a "scam"
So if I'm selling my house and you make an offer. You give me a deposit that is 100% refundable. My house us under contract and effectively off the market. You change your mind 4 weeks later and I've got nothing? No way is that acceptable.
In an earlier thread that you may not have read, I said, "if something goes wrong that is not the fault of the buyer." That language should have been included in my response before this one.
I've been a buyer and a seller. Buyers definitely need to have some skin in the game. If they place a $5,000 EMD and do not go through with the sale for any of several reasons attributable to the seller, such as misrepresentation/incomplete disclosure, latent defects, or other the like, the EMD should be refundable, as it is now. The flippers have really changed the market in this seller's market.
Some have said that DD is a peculiarity of North Carolina real estate. If it's so essential, how is the rest of the country surviving? (It's not essential.)
Plus, I'm not a statute writer. Proper drafting requires a lot more time than I'm going to invest in it right now. That's why there are bill drafters at the NCGA.
My perception is that flippers are less than 10% of the residential real estate transactions in 2ake and Durham County. Realtors: Is that remotely accurate?
If my 10% or less estimate is accurate, I have a hard time understanding how DD scam is pervasive because of flippers?
(I will agree that the whole DD thing confuses the heck out of me. I Sold 3 homes in AZ with non refundable deposits unless something came up on the inspection that made the buyer cancel the contract.)
If I have an approved scheduled appointment; best believe I'm coming in at the scheduled time of said appointment. I'll give a 5 minute or so "grace period" for previous showings to finish up (assuming non-overlapping showings). But after that...y'all's time is up...it's our turn. I've been on both sides of that interaction at times and even when we're the "overtime" group...I know it's the right thing to scoot out..
Not even "in the old days"...but in "the before times" aka just over a year ago....when a handful of showings may have been scheduled for the same time; you could usually space out enough "we'll be upstairs and you can be downstairs" and for the most part it was courteous and cordial. The madness I've seen the past few weeks(and apparently quite a few others; enough to have reported to TMLS for them to send out that message and make it a mandatory "pop up" before scheduling a showing on ShowingTime) when listing agents were changing from the default setting to allow overlapping appointments with 10+ groups at a property at once though.....pump the breaks on that.
I'm talking about overlapping showings, not me staying past my allotted time.
I'm talking about setting up an appointment where there was none scheduled yet (say 5-5:30), and having someone barge in at 5:10 "Oh, I've got a 5 pm appointment too!". They knew darn well when they set it up there was already another appt at that time - "There is another appt at that time, are you sure you want to continue?"
Though in the older days, we might have 4 9 am appts, and whoever got there first went first, and you went in your turn by yourself according to your number in line.
So if I'm selling my house and you make an offer. You give me a deposit that is 100% refundable. My house us under contract and effectively off the market. You change your mind 4 weeks later and I've got nothing? No way is that acceptable.
I sympathize with your son. But I still don't see where there is a "scam"
The scam would be a high DD fee on a house that turns out to have major concerns upon inspection. I agree, it isn't a scam. Crummy deals aren't inherently scams.
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