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What???? Let me see if I understand this correctly. Come January, if I want to buy a house in NC I will be charged a fee for the "honor" of spending my money on a house. Is that correct? It doesn't make any sense to me.
It's my right to determine if I'm buying a pig in a poke. It's my right to determine if the seller is a liar and hiding defetive construction. Charging me a fee as a buyer for the right to inspect the property and to determine that what I'm buying is what they've described, is chilling on my ability to do my due diligence and my right to protect myself from disreputable sellers and salesmen. In fact, all these things are more than rights. They are my obligations.
The "skin in the game" is my earnest money. If I don't perform, the seller keeps my earnest money. Conversely, if my inspections determine that the pig isn't in the poke, the house is defective or the seller lied about the house, I get my money back. It's the way it has worked for a long time.
As I understand it from just the two posts above, it looks to me like this fee is being instituted to the detriment of the public good. I would call it just another "junk fee" entering into the process that has a bigger effect than just emptying a buyer's wallet. The buyer is certainly getting "hosed." Maybe I'm all wrong or maybe I'm misunderstanding something, but i don't think so unless someone can show me the errors of my ways.
You will be "charged" no fee. You will negotiate terms of contract with the other party.
If using the NCAR Offer to Purchase and Contract, that negotiation may include a Due Diligence Fee and/or an EMD. Neither is required by law. And there are obvious merits to either approach.
Either or both DD Fee or EMD would be credited to you at Settlement. And I see that I did not make that point clear in the first post in this thread.
If the NCAR forms are not acceptable, the buyer always has had the right to engage an attorney to draft an offer and contract with terms they find acceptable. That fact has not changed. The forms are not required to be used, just are the only forms Realtors may use to write offers and contracts.
Houses cost hundreds of thousands of dollars. Is $10 or $20 really such a big deal? Especially when you get it back!
If that fee is true, then ddf might be a good idea, but like all things that start out good, I can see some agents suggestion that their sellers take more of a fee than what is recommended. I can see sellers requiring at $250 for the fee on the lower end homes and up to a few thousand for upper end homes.
If the fee can remain low then it would be stupid not to implement but if their is a cap install in the form that would keep sellers and their agents honest.
Plus there should be a fee for the buyers if they provide the ddf or not but the seller fails to transfer clear title. The buyer would be out of deal and possibly passed over deal. The fees seem to protect sellers instead of buyers, which is not fair.
It is the explanation from one of our instructors (George Bell) that the due diligence fee must be applied (has to have something there.. even $1.00) in order for the offer to purchase be valid per the attorney laws here in NC. However, this cannot be done on short sales or bank owned property (I'm not sure how they are going to make it valid then). Also, FHA and VA guidelines addendum will supersede this new offer to purchase contract in earnest money lost after the due diligence period (allowing buyer to get back their earnest money if all of a sudden they can't get the loan).
It is the explanation from one of our instructors (George Bell) that the due diligence fee must be applied (has to have something there.. even $1.00) in order for the offer to purchase be valid per the attorney laws here in NC. However, this cannot be done on short sales or bank owned property (I'm not sure how they are going to make it valid then). Also, FHA and VA guidelines addendum will supersede this new offer to purchase contract in earnest money lost after the due diligence period (allowing buyer to get back their earnest money if all of a sudden they can't get the loan).
Jane,
I have seen George discuss the new forms twice, in July, and last month.
In July he was adamant that there did not need to be a fee, that the agreement in the form that neither party would use the lack of a fee as reason to terminate was adequate.
His approach was softened a little last month, but he still supported it with the research Patrick Hetrick (http://law.campbell.edu/faculty-staff/patrick-hetrick.html - broken link)did at Campbell, that a fee was not necessary to have a binding contract.
I think George is backing away from possibly creating the impression he is giving legal advice.
I got the distinct impression that Miriam Baer was not greatly impressed with that agreement.
Last edited by MikeJaquish; 12-16-2010 at 09:18 AM..
As long as the fee isn't required and they can maintain control of the excessive request for the fee, then it might not be a bad idea. Investors have been using options for centuries now.
Mike I am glad that you explained the new forms and how they apply to us here at city-data. It has been helpful, just like anything, no one wants change that is going to cause a discomfort monetarily or otherwise.
Jane,
I have seen George discuss the new forms twice, in July, and last month.
In July he was adamant that there did not need to be a fee, that the agreement in the form that neither party would use the lack of a fee as reason to terminate was adequate.
His approach was softened a little last month, but he still supported it with the research Patrick Hetrick (http://law.campbell.edu/faculty-staff/patrick-hetrick.html - broken link)did at Campbell, that a fee was not necessary to have a binding contract.
I think George is backing away from possibly creating the impression he is giving legal advice.
I got the distinct impression that Miriam Baer was not greatly impressed with that agreement.
Hmm.. well it is even written in the Update course manual on page 7, second paragraph.. I won't go into the whole thing.. but it states "the safest course is to include a reasonable due diligence fee until such time as the issue is decided by a North Carolina appellate court". So perhaps the "jury" so to speak isn't sure??? I figure it is always better to be safe than sorry. So many discussions... I guess we'll figure it out at some point.
Hmm.. well it is even written in the Update course manual on page 7, second paragraph.. I won't go into the whole thing.. but it states "the safest course is to include a reasonable due diligence fee until such time as the issue is decided by a North Carolina appellate court". So perhaps the "jury" so to speak isn't sure??? I figure it is always better to be safe than sorry. So many discussions... I guess we'll figure it out at some point .
As long as we have a ready, willing, and able Buyer and a motivated Seller, and everyone acts in good faith, yes, we will figure it out.
When gaming the paperwork and looking for ways to use it to take unfair advantage of the other party is more important than conveying property, we'll hit the skids.
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