Explanation of the Due Diligence Period
When working with Team Lyon we want to be sure you have as much knowledge as possible so the process of buying and selling is stress free whenever it can be. To that end we wanted to take this opportunity to explain what the Due Diligence period is in the Georgia contracts.
In Real Estate, Due Diligence is the period immediately after the acceptance of a Purchase and Sale contract. Most often we see Due Diligence Periods in the 7-14 day range, but this is a negotiable item and can be as little as zero days, thus no Due Diligence Period. When counting days of Due Diligence day 1 is the day after the binding contract date. Unless otherwise stated the due diligence period ends at 11:59pm on the day of expiration. The binding date can be found on page 7 of the GAR contract below the signatures. This time period is very crucial in determining if the home is the right fit for the buyer. For the seller, this time period means inspections and possible further purchase negotiations.
During the Due Diligence period the buyer has the opportunity to do any inspections of the property, review additional documents and disclosures made by seller and research if there are any conditions: physical, legal or otherwise that make the property unsuitable for the buyer. If the buyer determines that the property is not suitable for any reason at all, ANY reason, the buyer can terminate the contract and receive their Earnest Money back provided they have terminated with notice to seller, in writing within the Due Diligence Period.
Often times the buyer may find undesirable conditions during the Due Diligence Period and request that the seller repair, correct or remedy these conditions prior to closing. The seller can then decide to either:
1. Repair/Remedy all of the items requested
2. Repair/Remedy some of the items requested
3. Repair/Remedy none of the items requested
4. Offer monetary compensation to buyer in lieu of any repairs
5. Request to extend the Due Diligence Period if additional time is needed to prepare a response to buyer
At that point the buyer can then decide to either:
1. Counter the seller’s proposal
2. Accept the seller’s proposal
3. Request to extend the Due Diligence Period if additional time is needed to come to an agreement
4. Terminate the contract
If an agreement has not been reached between the buyer and seller in writing within the Due Diligence Period the buyer should terminate or risk being bound by the seller’s last signed response in regards to such repairs/remedies.
Keep in mind that the Due Diligence Period is different from the Financing and Appraisal contingencies. Other contingencies of the contract are usually very specific whereas the Due Diligence is general in nature.
If you have any questions about the Due Diligence process please let us know and we can further explain it to you. We always appreciate referrals so if you have friends or family looking to buy or sell, please give us their contact info.