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I live in Asheville NC and just had a offer to purchase rescinded. The buyers agent claimed that the buyers did not want credit at closing versus repairs because they had both started new jobs. That didn't make much sense, but let me proceed. When the offer was submitted, there was no due diligence fee listed on the offer to purchase and my agent went back and reluctantly the buyers agent submitted a check for $500 which I did not cash. I returned the check to my realtor when the deal flipped. When my realtor went back to negotiate, the buyer's realtor quit responding altogether. I just heard a story a couple of weeks ago regarding a practice that seems to be pretty prevalent here in Asheville. Supposedly, there are agents showing houses and encouraging there clients to make offers on one, two or three houses at the same time and then the buyers pick and choose which one they want based on how the negotiations, inspections etc. are proceeding. Is this legal? I find it hard to believe that it would be. This is exactly what I believe happened to us. As for us, we want a quick sale, we are building a new home in the Triangle and due to time constraints and wanting to be done here, we ended up dropping our price. The due diligence debacle also cost us two weeks of showing time. I would appreciate any thoughts/input from NC realtors. Thanks!
Last edited by Dukefan618; 09-24-2015 at 05:25 AM..
I heard about that happening last year as well. People tying up houses while they decided which one they really wanted. Sellers should always cash the DD check immediately. That money is yours to keep. It really should be higher, in my opinion, since those first few weeks of being on the market are so important.
I knew I could deposit the check immediately, call me crazy but I just did not want the dollars from people if it turned out I was not going to do a deal with. It's crazy, but I just did not want their karma near me if the deal didn't fly. Having said that, I agree the dd deposit should be higher. My karma would probably have gone out the window if it was five thousand versus five hundred.
You were given the $500 in return for giving a contract and the privilege of performing DD to the buyers.
It is that simple, as spelled out in the contract. You gave. You received. That was one entire deal made in the contract.
Yes, you should have gone straight to the bank with it.
The amount is just fine for most purchases, and is actually hugely inflated due to the market being tilted toward sellers. The error was yours in returning it.
Due Diligence and DD Fees cause so much confusion. I blame agents 100% for that.
As far as buyers making multiple offers? It happens. It happened recently to a client. Twice. Once they pocketed $500. The other never got final signatures after meeting of the minds at 10:00PM, withdrawn at 7:00AM. Blew away overnight.
But, as a seller, would you have entertained multiple offers? That happens much more regularly, fer sherr. Would that be a problem?
Thanks for the prompt reply. You bet your boots I would consider and review multiple offers. Having said that I would never sign a contract on more than one at a time. Like I said, I would consider, review and ultimately only sign one. The multiple contracts to different sellers is what really throws me. It seems very unfair to the seller especially since it can remove any interest from the market for weeks at a time. The good news, offers are like street cars, there should be another shortly. Thanks again.
Thanks for the prompt reply. You bet your boots I would consider and review multiple offers. Having said that I would never sign a contract on more than one at a time. Like I said, I would consider, review and ultimately only sign one. The multiple contracts to different sellers is what really throws me. It seems very unfair to the seller especially since it can remove any interest from the market for weeks at a time. The good news, offers are like street cars, there should be another shortly. Thanks again.
We are stuck with a foot in the past, and in the present.
Buyers and Sellers don't like to view and show homes with a contract on them, don't like writing and negotiating back up offers, and are conditioned so by agents who could lead them better.
A house under contract should be shown, viewed, and considered as on the market and open to backup offers until such time as the buyer has performed adequately to convince a seller that it is a "done deal." That may be at time of contract, at the end of DD Period, or the day before closing, or any time in between.
The whole DD Fee thing is a tempest in a teapot. When we one day swing back to favor buyers in the market, sellers will be lucky to get the originally intended nominal $10-$20 fee. They won't have the leverage they do now.
I'm not a lawyer but this is my understanding...If they make offers on multiple properties and only plan to purchase 1, that could be considered fraud unless the buyers disclosed to the seller up front that was what they were doing. Their agent should have known better and is walking shaky ground if this was known and not disclosed by the agent.
I'm not a lawyer but this is my understanding...If they make offers on multiple properties and only plan to purchase 1, that could be considered fraud unless the buyers disclosed to the seller up front that was what they were doing. Their agent should have known better and is walking shaky ground if this was known and not disclosed by the agent.
it's been able practically since NC went to Alt 1 and Alt 2 what - 8 years ago?
Yes, in NC it is perfectly legal to be under contract as a Buyer on as many houses as you are willing to "forfeit" a due diligence fee on. And I completely agree with Mike that we are stuck in the past and present, since as soon as a home goes contingent showings and interest disappear. IMO, Buyers agents should be cognizant of the stats and reality - which is that we have a large % of deals fall apart, and if you're in a Backup position, you thus have a good chance, at no risk, to become the actual buyer of said home.
I do differ from Mike that, given the "any reason or no reason" ability of Buyers to terminate, that the Due Diligence fee should be extremely low. But that's why we have opinions!
it's been able practically since NC went to Alt 1 and Alt 2 what - 8 years ago?
Yes, in NC it is perfectly legal to be under contract as a Buyer on as many houses as you are willing to "forfeit" a due diligence fee on. And I completely agree with Mike that we are stuck in the past and present, since as soon as a home goes contingent showings and interest disappear. IMO, Buyers agents should be cognizant of the stats and reality - which is that we have a large % of deals fall apart, and if you're in a Backup position, you thus have a good chance, at no risk, to become the actual buyer of said home.
I do differ from Mike that, given the "any reason or no reason" ability of Buyers to terminate, that the Due Diligence fee should be extremely low. But that's why we have opinions!
Ah, but... Mike never said "extremely low." Mike may disagree that the DD Period made it so much easier for buyers to terminate than it was in the past. Actually, it favors sellers and brought the pendulum their way significantly when considering the history of our standard NCAR forms.
Mike actually said "the originally intended nominal $10-$20 fee." That is an "adequate" fee as originally intended, not "extremely low." The benefit of attending training is to learn the intents of the makers. They didn't foresee the ridiculousness of agents meddling with the market while they skipped training because there wasn't a free beer/buffet.
Since no DD Fee is required, not a penny, $10 or $20 is certainly infinitely higher than the basic requirement.
Anything over nothing is a salute to market forces and leverage. If you had 10 homes to pick from, all similarly suitable, why would you give a DD Fee at all?
Right now, when a property enters the third week on the market, buyers immediately ask, "What is wrong with it? It has been on the market a loooong time."
Look back just 5-6 years ago, when we bragged if we moved a listing in less than 90--100 days. When that dynamic reasserts itself, and one day it will, sellers will GIVE DD fees to get a contract. "Dude, I'll pay for your inspection and your beautiful kids' first years at Ravenscroft. Just GET ME A CONTRACT."
DD Fees came in when the market was out of balance in the other direction. Agents aggressively screwed the consumer and the market with the guidance they gave and expectations they created.
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