Under Contract: Now What?
Congratulations, you are on your way to owning your very own home! Follow these suggestions (and the advice of your Realtors ®) so that your Due Diligence Period (DDP) and settlement proceed as smoothly as possible. North and South Carolina are Due Diligence states. The DDP in each state is conceptually about the same, though contractually and monetarily a bit different. Now let's go into some detail about the Due Diligence Period.
The Due Diligence Period is a negotiated period of time that is agreed upon by buyer and seller at the time of contract. This is the period of time when buyers should make substantial strides towards confirming their financing, inspecting the home, seeking repairs, etc.. In short, during this period of time, buyers are expected to conduct their "due diligence" on the property and their own ability to purchase it. As a result, sellers typically seek a shorter period of time, while buyers seek a longer period to get everything done.
The clock on the DDP starts ticking from the moment the contract is executed. Some of the things that typically get done during this period of time are:
- delivery of the Due Diligence Fee (in North Carolina) to the seller/listing agent
- delivery of the contract and Earnest Money to the closing attorney's office and scheduling of the closing
- buyer submits info as needed to the lender/loan underwriting, working towards full loan approval
- lender gets an appraisal of the property, ensures it meets underwriting requirements
- buyer obtains and reviews any community covenants, codes and restrictions (CC&Rs), bylaws, rules and restrictions
- buyer may seek a C.L.U.E. report from the seller to investigate the insurability and cost to insure the property
- buyer hires third-party inspectors (e.g. home, wood-destroying insects, radon, roof, HVAC, mold, water quality, well, septic, etc.)
- buyer requests and comes to an agreement with the seller on repairs, including by when they must be completed
- confirmation of school zoning
- checking the providers and typical cost of utilities for the property
- investigating anything else that may be of concern to the buyer
If something comes up during the Due Diligence Period that is unacceptable or unsatisfactory to the buyer, an option is to back out of the agreement. If this happens before the end of the Due Diligence Period, only the Due Diligence Fee (in North Carolina) or the Termination Fee (in South Carolina) is forfeit, and the Earnest Money is recoverable. Otherwise, after the end of the DDP, the Earnest Money Deposit belongs to the seller too.
Assuming the parties continue forward beyond the Due Diligence Period, some further things to do:
- call the utility providers to transfer service to your name
- set up your homeowner's insurance
- confirm a clean title search by the closing attorney
- review the closing disclosure/settlement statement for accuracy
- obtain wire transfer instructions directly from the closing attorneys' office
- share the wire instructions with your bank and wire the amount to arrive at the attorney's office no later than 1 day prior to closing (check how long it takes and request the transfer accordingly)
- confirm receipt for the correct amount with the closing attorney's office
- get invoices and/or proof of repairs, check the repairs yourself or through your third-party inspector. Just remember there is no recourse for poor repairs after closing.
- schedule a final walk-through to review the condition of the property just before closing and ensure it is as the contract says it should be. Included appliances and fixtures should be exactly as you saw them unless the seller previously notified otherwise.
You've made it! Once the sale has closed, you're the proud owner of a new home. Congratulations!
As you can see, a lot has to occur throughout the contract period. We've been through a ton of these and will gladly hold your hand throughout the process. Lean on us, we'll take good care of you!