Due diligence is the period in a North Carolina real estate contract when the buyer investigates the property and transaction before deciding whether to proceed.
During this period, buyers commonly investigate the home's condition, financing, appraisal, title, survey, insurance, septic system, well, zoning and other issues that could affect the purchase. The length of the period and due diligence fee are negotiated between buyer and seller.
Three things buyers should understand
• The due diligence period has a negotiated deadline.
• The due diligence fee is generally paid directly to the seller.
• Under the standard contract, the buyer generally has the right to terminate during due diligence, but the due diligence fee is generally nonrefundable.
What should I investigate?
Coastal properties often warrant additional scrutiny because insurance, flood exposure and storm history can materially affect ownership costs.
Frequently asked questions
Can I back out during due diligence?
Generally, the contract allows the buyer to terminate for any reason or no reason
Do I get my due diligence fee back?
Generally, no, the due diligence fee is non refundable.
Is earnest money the same as due diligence money?
No. They serve different purposes and are treated differently under the contract.
BlueCoast local perspective
Due diligence isn't a formality. It's your opportunity to turn “I love this house” into “I understand what I'm buying.”
If you're buying in North Carolina, we'll help you understand the due diligence process before you write the offer.