Besides the purchase of the home itself, what other home-buying fees must buyers be aware of before making an offer on a home?
One of the most unique things about North Carolina real estate transactions is the due diligence fee that buyers pay sellers. It’s a non-refundable amount of money that compensates them for taking their home off the market for however long both parties have negotiated. This fee can vary significantly, and it’s very competitive under the $300,000 price range because the market itself is competitive. We actually had a buyer offer one of our sellers $5,000 for their due diligence fee during negotiations. Technically, this means they were risking $5,000 if they didn’t end up buying the house, but it was the perfect house for them and they were confident they would move forward with the purchase.
“You need an action plan in place so you don’t miss anything important during the process.”
The due diligence fee also puts buyers in a powerful position because it allows them to walk away from the deal for any reason whatsoever. If you make an offer on one home, pay the due diligence fee, establish a contract for the transaction, but then find another home you like even better two weeks later, you’re free to cancel your current contract and buy that house.
Essentially, that makes this fee an insurance policy. Back when I first started in the business, buyers didn’t have this much flexibility because there was no due diligence fee. This means some of them got pushed into buying homes they didn’t want because they didn’t feel there was any way to get out of the contract. On the flipside, sellers would get no compensation if a buyer made them an offer but then recanted.
The current way of doing things isn’t a perfect system, but I do think it’s better than how it used to be because sellers get compensated for their time and buyers have the freedom to walk away from a transaction if they feel like it.
In addition to the due diligence fee, you’ll also have to consider the cost of the home inspection. If you want to dig a little deeper into the home’s condition, you may want to schedule pest inspections, radon surveys, and other tests of that nature. Some inspections are required based on the type of loan you’re getting.
Think of it this way: If you want to take a good vacation, you probably won’t just jump in the car, drive south, and stop once you see something pretty. You’ll probably make a plan, and the same logic applies to buying a home. You need an action plan in place so you don’t miss anything important during the process. Also, it just makes good overall sense to have a plan and know how much money you’ll have to bring to the closing table to cover your down payment and any additional fees.
If you work with the Jason Bramblett Real Estate team, we can formulate a clear action plan that enables you to gain confidence with what you’re buying with each step you take. This way, you’ll feel great about the decision you made once you get to closing.
