Essential for home buyers to know: The Due Diligence Fee

As we head into home-buying season, I thought I would review some of the more important things for home buyers to be aware of.

One is the due diligence fee. The due diligence fee is negotiable, but is often 1% or more of the offer amount. The fee counts towards the purchase of the home (it is basically a deposit).

The Due Diligence Fee is non-refundable except in the event of a material breach of this Contract by Seller.

Even if a home inspection finds a major structural defect in the home, the due diligence fee will not be refundable.

The due diligence fee becomes an obligation of the buyer as soon as the offer is accepted by the seller. Even if the buyer changes their mind 10 minutes after acceptance, they will still be obligated to pay.

Should the Buyer fail to deliver either the Due Diligence Fee by the due date, or should any check or other funds paid by Buyer be dishonored, for any reason, by the institution upon which the payment is drawn, the Buyer will have one banking day after written notice to deliver cash, official bank check, wire transfer or electronic transfer to the payee.

In the event Buyer does not timely deliver the required funds, Seller shall have the right to terminate this Contract upon written notice to Buyer, and Seller shall be entitled to recover the Due Diligence Fee as well as all Earnest Money Deposit paid or to be paid in the future.

If the seller needs to bring about legal proceedings to collect the due diligence fee, the buyer may also end up having to pay the seller's legal fees.

Because the Due Diligence fee is non-refundable, buyers need to do as much due diligence themselves before making an offer.

I’d love the opportunity to work with you and help you to be as prepared as possible to mitigate the risks associated with buying a home.