Begining January 1, 2011, North Carolina will be using a new NC Offer To Purchase and Contract form.  This residential form replaces the traditional Offer to Purchase and is radically different in several sections.  In fact, a great deal of standard forms will be updated. It is important to understand these changes as they will affect buyers, sellers, and real estate agents.

For years, the Offer to Purchase Contract (OTP) has gone through minor changes as lawsuits, agency issues, municipal codes, building styles, and general expectations have dictated a need to address issues in a clearer and more thorough manner.  The new contract eliminates detailed sections of the old contract that address inspections, repair issues, and financing.  In this blog entry we will will give an overview of the changes.  We will follow up with some additional information in this series.

The contract now looks more like the commercial form in that it provides for a "Due Diligence Fee" and a "Due Diligence" time period.  Let's look at the basics of these.

The "Due Diligence Fee" is a negotiated amount of money paid by the buyer to the seller to conduct Due Diligence.  This money will be credited to the purchase price at closing or forfeited to seller in the event the buyer does not close.  The fee may only be returned to the buyer in rare cases where the sellers breaches the contract, cannot provide clear title, or the house is damaged by fire or other causes. This fee is not to be confused with "Earnest Money."

The "Due Diligence Period" is a period of time from the execution of the contract to a specific future date in which the buyer must complete all inspections, document review, ordinance review, insurance costs as well as satisfy all lender obligations (including appraisal).  This is also the period of time that the buyer must complete negotiations with the seller regarding repairs.  The Due Diligence period is a "time is of the essence" date.  Once the Due Diligence period has passed, the buyer must purchase the property or forfeit their earnest money. 

What does this mean for the buyer?  Essentially, during the Due Diligence period, the buyer can terminate this contract for any reason or no reason and still be entitled to a return of earnest monies.  The buyer needs to move quickly and efficiently during this period of time so they do not risk a potential loss of money or opportunity.

What does it mean for the seller?  The "status" of your property listing will be changed and will not be shown by as many agents since it is under a conditional contract.  Your risk is loss of time on the market. 

In the next series we will explore some more details and strategies with regards to the new forms and how Wilmington NC real estate and other markets will be affected.

 

Wilmington NC Real Estate Sales - Chris Baynes REALTOR Chris Baynes and Associates is one of the areas most successful Realtor Teams.  We specialize in helping buyers and sellers with real estate services in the greater Wilmington NC area including Wrightsville Beach, Carolina Beach, Kure Beach, Castle Hayne, Hampstead, Leland, Belville, New Hanover County, Brunswick County and Pender County, and all Wilmington NC Real Estate.  (910) 470-4408