BUYER ADVICE FOR THE DUE DILIGENCE OFFER TO PURCHASE FORM
Be Prepared and Be a “Better Buyer” There have been dramatic changes in mortgage lending regulations and real estate market conditions! Because those changes affect the buying process when using the standard "Due Diligence” Offer to Purchase and Contract, Coldwell Banker Howard Perry and Walston has developed this advice to help buyers better understand what will be necessary to be more likely to have an offer accepted, have an on-time closing and understand the nature of the typical sale transaction using that form. The goal is to make you a “Better Buyer". Buyers are encouraged to read and review with their buyer’s agent the “Contract to Closing Timeline” and the "Sample" version of the Offer to Purchase and Contract, and any addenda that may be used. Being prepared, understanding the time that will be required and familiarity with the terms of the contract form that is being used will help make you a Better Buyer. This will work to your advantage as discussed below. 1. Mortgage loan pre-approval is highly recommended . All buyers who will need a mortgage loan should obtain a "Preferred Buyer" Pre-Approval letter from our mortgage partner, Towne Mortgage of the Carolinas, or your selected lender. Do this prior to beginning your property search, but certainly before making any offer. In a highly competitive “sellers’ market”, this will give you a better negotiating position and avoid wasting time looking at properties that exceed your financial limits. Equally important, without this head start on the mortgage process, you are likely to need substantially more time after contract to determine if you can obtain the loan you need. This process will require verification of income, assets and expenses. Of course, formal application and underwriting and an appraisal will still be necessary and mortgage loan approval and funding is always subject to change until Settlement. But being a Preferred Buyer using Towne Mortgage of the Carolinas and receiving good advice on how to avoid loan problems significantly reduces this risk. 2. A Highly Competitive Seller’s Market. The Research Triangle and nearby markets are experiencing an unprecedented, highly competitive “Seller’s Market”, and that has resulted in seller expectations that must be carefully understood. In order to obtain buyer’s who would be very strongly motivated to complete closing, regardless of what is found or determined during the Due Diligence Period established under the contract, many sellers have come to expect extraordinarily high Due Diligence Fees to be offered and paid to them. It must be clearly understood that the Due Diligence Fee is paid directly to the seller, becoming their property upon payment, and is non-refundable. It is NOT held in escrow like an Earnest Money Deposit. And because of that, Earnest Money Deposits are less frequently expected by Sellers. Because the Property is sold in its current condition (essentially “as is”) and the seller has no obligation to repair or improve any defective condition discovered after due diligence inspections and investigations, paying a very high Due Diligence Fee can be quite risky, and Buyers must clearly appreciate the risk they are taking. Even in a “Buyer’s Market”, a Due Diligence Fee is usually requested by sellers to compensate for the Due Diligence Period that their property is effectively "off the market".
Buyer Initials Acknowledging Receipt _______ _______
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