When you enter a real estate contract on the property you are considering buying, the sale is subject to a due diligence period where, the buyer has the opportunity to terminate the contract if they decide the home isn’t for them.
The due diligence period is agreed upon between the buyer and the seller so the buyer will have time to confirm that they are purchasing a home that is free from disclosed or undisclosed issues. The seller also benefits from the due diligence period by being able to be able to sell the home without any major complications like the buyer being unable to find financing in time.
When negotiating the due diligence period, it’s crucial to come to terms that both you and seller agree on. Having a good relationship with the seller of the home you hope to buy is key to negotiating the length of the due diligence period that is beneficial to you both. The due diligence period is made to protect both the buyer and seller in the transaction from an unmarketable title, to the real estate contract being broken.
It’s important to remember that the seller wants to cooperate with the buyer and get their home off the market as soon as possible. If you are making unreasonable demands, the seller will most likely back out and look for a buyer who is easier to work with.
If the home requires repairs, having too short a due diligence period can end up rushing the repairs in an effort to meet the deadline, causing shoddy work that can end up costing more money in time and labor. Remember to mention any repairs and other work to the home to the seller when negotiating. A period long enough to complete the work will satisfy both parties.
Should there not be enough time in the said period, it can always be extended if agreed upon by both parties. The seller does not have to agree to an extended period of due diligence, which can force the buyer to either continue with the purchase or terminate the contract. Regardless, the buyer can get their earnest money back.
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