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Respected Contributor
Posts: 2,022
Registered: ‎03-11-2010

''Due Diligence'' when buying a house

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.

Respected Contributor
Posts: 3,095
Registered: ‎05-01-2020

Re: ''Due Diligence'' when buying a house

I know someone who put down more than that.

Honored Contributor
Posts: 70,099
Registered: ‎03-10-2010

Re: ''Due Diligence'' when buying a house

Is that what they used to call "earnest money"?  The seller could easily lose that amount or more if you backed out of the deal.

New Mexico☀️Land Of Enchantment
Respected Contributor
Posts: 3,031
Registered: ‎10-22-2018

Re: ''Due Diligence'' when buying a house

Due diligence used to be the research a potential buyer needs to do prior to making an offer. 

 

Has it changed?

Honored Contributor
Posts: 9,626
Registered: ‎02-07-2011

Re: ''Due Diligence'' when buying a house

Usually this deposit is put into an escrow account.  Why would the seller want this?  $10,000 sounds like a lot but I guess it depends on the asking price of the house. 

 

I would find a reputable realtor and let him/her deal with the negotiations.

 

 

Esteemed Contributor
Posts: 5,904
Registered: ‎07-26-2019

Re: ''Due Diligence'' when buying a house

@Kachina624 

My experience and understanding is that the Earnest money was put in an escrow account. If , the buyer backs out just because they changed their mind than the seller could keep the money, however if something is found ary with the property such as  water issue ,  sewerage issue  ,   mold  ect than if the seller refused to pay and correct the deficiency  than the buyer could back out and get their earnest money back.

Honored Contributor
Posts: 9,626
Registered: ‎02-07-2011

Re: ''Due Diligence'' when buying a house

 


@skatting44 wrote:

@Kachina624 

My experience and understanding is that the Earnest money was put in an escrow account. If , the buyer backs out just because they changed their mind than the seller could keep the money, however if something is found ary with the property such as  water issue ,  sewerage issue  ,   mold  ect than if the seller refused to pay and correct the deficiency  than the buyer could back out and get their earnest money back.


Exactly!  

Esteemed Contributor
Posts: 5,562
Registered: ‎03-09-2010

Re: ''Due Diligence'' when buying a house

I'm house hunting/considering building and $10k is a lot here but ITA it depends on home price.

 

During the hot, hot market, realtors were submitting  your check with your offer.and preapproval letter from your lender.  If the offer wasn't accepted you got your uncashed check back, never deposited to escrow.

 

 

Respected Contributor
Posts: 4,691
Registered: ‎03-15-2021

Re: ''Due Diligence'' when buying a house

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.

Honored Contributor
Posts: 9,626
Registered: ‎02-07-2011

Re: ''Due Diligence'' when buying a house


@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.


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