Among Friends

[elated]

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@kaydee50 wrote:

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@On It wrote:

Watching the real estate market is my hobby. I have noticed in the past couple of months or so that many contracts are falling through, and houses are coming back onto the market in higher numbers than normal. That may explain sellers wanting more due diligence or escrow money.

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Also that prices are being reduced and properties are on the market longer.

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The reason prices are coming down and the housing market is struggling because interest rates are 7%. Many don't want to sell their current home with lower interest rates to buy a home with higher interest rates. In many cases, the interest rates could be double of what they are now paying.

[pieman]

Some agents will tell you in the description: "Buyer, do diligence":

Meaning, "make sure you have that house fully inspected, the property surveyed and so on".

Many times people don't do these things, only to find out later that what they thought was their property really belongs to the house next door.

The fact that the seller is asking for 10,000.00 is not diligence as others here have stated, the seller is taking advantage of you, or trying to.

Is this a FSBO?, if so, as the other said, walk away.

If they are working with am agent, shame on them.

Its good to give a serious earnest amount, but 10 grand?, no,,,,!

I hope ya'll were able to read this as someone on here decided to scold me on not being able to read my last post on real estate.

Good luck on your house hunting, just keep on your toes and don't be afraid to ask questions, there are no stupid questions<<<///

We are selling our house now in FL and would never ask someone for more earnest monies, its just rude.... and drives away a prospective sale..

[BlueFinch]

@sarahpanda From what I understand, it's just a good faith payment, that means the buyers are serious. It then takes the home off the market.

Taking the home off market is a setback for the seller, if the buyer just changes their mind. If they have to cut a check, this shows they're not just playing around. They really want the home.

I had a large amount placed in escrow when I sold my mom's home this year. Not because I asked for it, from the buyers, but because it is a standard transaction payment.  

Yes, if they reneged on the deal, they would have lost their money, but not so, if there were unexpected issues found during the home inspection that were my responsibility that I refused to, or couldn't correct. 

[Sooner]

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@sarahpanda wrote:

I was trying to buy a house and was told the seller wanted $10,000 in ''due diligence''.  Isn't that an extreme amount???  That is $$ that you don't get back if the deal doesn't go through for any reason.

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@sarahpanda Any time money down is wanted, get A COPY OF WHAT THE MONEY IS FOR AND HOW IT WILL BE HELD AND/OR RETURNED.  See it in writing,if you don't understand get legal advice.

To me, in today's market, $10,000 earnest money doesn't seem out of line, but you can negotiate that too! There isn't a set amount or percent.

[IMW]

Good faith $?

[gidgetgh]

I sold our house in February.  Contract called for a 14 day period for the buyers to do their due diligence.  I didn't require any money from them for their due diligence 2 weeks.

I had a stellar agent and that never even came up.

[BoopOMatic]

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@On It wrote:

Watching the real estate market is my hobby. I have noticed in the past couple of months or so that many contracts are falling through, and houses are coming back onto the market in higher numbers than normal. That may explain sellers wanting more due diligence or escrow money.

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 I've noticed the same thing.

 What do you think accounts for this, inability to secure a loan?

 Just curious as I've seen this happen several times....

[ncsailor]

Due diligence varies from state to state. For example in North Carolina due diligence is paid to the seller within 24 hours of the contract being formed and is non-refundable in the event that the buyer walks away. It is NOT the same as earnest money here - that is a separate deposit generally held in escrow. In South Carolina, due diligence is only paid if a buyer terminates a contract so as you can see you really need a local real estate agent to advise you. As for the amount, it totally depends on the price of the house, the popularity of the neighborhood, are there multiple offers (in which case high due diligence is a way to differentiate your offer), etc.

Again, real estate is local and buyers generally do not pay commission so by all means enlist the help of a professional who can help you understand the deposits, important dates where money is at risk, etc. Asking a forum like this for advice that you need a license to answer is like me walking into a grocery store and asking for medical advice.

[gertrudecloset]

@sarahpanda wrong term for this application.

The term "due dilligence typically means to check your bona fides, papers in order, requirements, deliverables, needs to make something happen.  Dot your i's and cross your t's....so to speak.

Likely what they are talking about is your downpayment.  If you are not buying the house outright in cash then you will be financing through a bank or credit union.  It will take homeowners until closing time to get that money from the bank you chose to do business with.  They want your down payment in cash (right away).  Down payments are usually 10-20% of the price of the home (conventional mortgages).  Some can make it with less down payment but lots of banks not doing that.  FHA has programs for First Time Homebuyer's with as little as 3-5% down if the program still exists.

I recommend if you haven't actually purchased the house yet you go to a homeowner's seminar and learn the legal and financial lingo regarding buying a home.  Sounds like you're missing some important info.

Payments in earnest shouldn't be 10,000.  It's usually a much smaller amount that tells the seller you are serious about securing a lender to purchase their home.

[gertrudecloset]

Due Diligence means examinations, inspections, investigations, tests, studies, analyses, appraisals, evaluations and/or investigations with respect to the Property, the Documents, and other information and documents regarding the Property, including, without limitation, examination and review of title matters, applicable land use and zoning Laws and other Laws applicable to the Property, the physical condition of the Property, and the economic status of the Property.

https://www.lawinsider.com/dictionary/due-dilligence