Performing Due Diligence on Your Charlotte Home Purchase
In the state of North Carolina, buyers and sellers negotiate a Due Diligence period. That period allows the buyer plenty of time to complete the due diligence that needs to be done on a home to ascertain that property is the right one for that particular buyer. The Due Diligence period is typically 21 days from the contract execution, giving plenty of time for all appointments to be made, inspections to be completed and report reviews also be completed as much of the due diligence ‘tasks’ can be managed simultaneously. Be 100% certain that your real estate agent is working diligently to command this process because Time is of the Essence with our new NC Contracts.
The due diligence work includes home inspections, review of the seller disclosures, HOA disclosures and requirements, your lender’s mortgage approval, the appraisal, the survey, the Title search by your attorney and your REALTOR®’s review of the city/county information including flood zones, permitting, etc.
*Bear in mind that Disclosure laws vary to state, but in North & South Carolina, the law requires the seller to complete a real estate (property) disclosure statement.
**Historic homeowners (homes over 50 years old), may opt to sell their home with no disclosure made regarding the fireplace–‘Fireplace Sold As Is’ will be noted on the Disclosure. Your inspector will evaluate and let you know if he/she recommends a separate chimney/fireplace inspection.
Sellers’ Disclosure Statement
Items that are to be included in the Sellers’ Disclosure Statement include but, are not limited to
- Age of the home
- Age of the roof
- Exterior composition
- Electrical
- HVAC
- Water
- Sewer
Your homeowner’s insurance agent will want to know the following:
- Distance from your home to a fire hydrant
- Does the home have a burglar alarm?
- Does the home have a fire alarm/smoke detectors/sprinklers?
- Some agents may ask the age of your roof as well
Sellers also are required to indicate any significant defects or malfunctions existing in the home’s major systems. A checklist specifies interior and exterior walls, ceilings, roof, insulation, windows, fences, driveway, sidewalks, floors, doors, foundation, as well as the electrical and plumbing systems. The Disclosure form also asks sellers to note the presence of any environmental hazards, walls or fences shared with adjoining landowners, any encroachments or easements (which may also be confirmed with a survey, which is HIGHLY recommended), room additions or repairs made without the necessary permits or not in compliance with building codes, zoning violations, citations against the property and lawsuits against the seller affecting the property.
The Inspections
This should be ordered right away–the first hour that you are under Contract that the inspector’s office is open! Getting on the inspector’s schedule is typically the longest part of the process and you want that inspection completed the FIRST week that you’re under Contract.
The inspector will look for all items listed on the Disclosure Statement, electrical, mechanical, structural/settling (remember vertical cracks are normal–check into the horizontal ones), sliding or soil problems, flooding or drainage problems and any major damage resulting from natural disasters or acts of nature. Amenities such as a pool or spa, patio or deck, built-in barbeque and outdoor fireplaces will also be inspected. The inspector may question the seller about items that he finds (or cannot locate) to be able to give you a detail, thorough assessment of the property.
People buying a condominium must be aware of covenants, codes and restrictions or other deed restrictions. It’s important to note that the simple idea of disclosing defects has broadened significantly in recent years. NC & SC have mandated Disclosure forms that are available in the home or on the MLS listing (ask your agent for information).
The Survey
The next call that your agent will be making on your behalf is to the attorney to get your Closing on the books. He/she will introduce your attorney to your lender, who will work closely to get your property purchase completed in a timely fashion. The agent will provide both the lender and the attorney a copy of the ratified Contract, as well as any other pertinent information that they will need to being their part of the process.
The attorney typically orders the survey but, if he/she does not do it, your agent will manage that for you as well.
The Appraisal
As above, your real estate agent works closely with the lender and the attorney to get the process started, sharing important documents with each and overseeing the process. Once again, Time is of the Essence, and delays can cost the buyer big money.
Once the lender has a copy of your ratified Contract, the appraisal will be ordered. This part ranks right up there with the inspection in the amount of time that it takes to complete this task. So, be sure that your lender has very quickly ordered your appraisal from the appraisal management company. It may take a week to get to the home to complete the appraisal and another week to receive the completed appraisal report.
The Mortgage Loan
Savvy buyers have already received a pre-approval, which truly is an advantage to you in your negotiations with sellers. If you are not pre-approved, they typically don’t want to take a chance of pulling their home off of the market until they know that you are. Time off of the market holds a very large potential for the sellers to lose another buyer so, they are typically not willing to take a chance on a non-qualified buyer.
With the pre-approval out of the way, once your lender has a copy of the necessary contractual documents, he/she will provide a list of documents for you to return to him/her. These documents can easily be scanned and returned to the lender with only about an hour’s work on the buyer’s part. So, get those documents in and let the lender do his or her part right away.
On occasion, the lender will qualify some of the documents with you, ask for further documentation that could be necessary for the underwriting process, etc. Be prepared to make quick responses to your lender–Time is of the Essence.
More Due Diligence
Your real estate agent will also oversee the remaining parts of the Due Diligence, providing you information for you to review. Your real estate agent will review the inspection reports with you so that you can determine if further Due Diligence is necessary. Many buyers have their Due Diligence easily completed within the first 14 days and can then focus on their packing/move.
For more information on the Due Diligence process or the home buying process, give me a call at (704) 491-3310 or email me at Info@GoogleCharlotte.com.
Originally posted at http://activerain.com/blogsview/3314249/charlotte-home-buyer-faq-what-is-the-due-diligence-period-