Due diligence in North Carolina
One of the most common questions our Brokers receive pertains to due diligence and how it works. We thought it would be helpful to explain the due diligence process and what it means to a buyer and a seller. In 2011, the North Carolina Real Estate Commission introduced a revised Offer to Purchase and Contract in which a new term called “due diligence” was introduced. Due diligence is a process by which a buyer gives the seller a non-refundable fee in order to have time to inspect, appraise and do their “due diligence” in determining if they will close on the home.
Please don’t confuse the due diligence fee with an earnest money deposit, though. Earnest money is a second part of the typical Offer to Purchase. Like the due diligence fee it’s also negotiable, but a big difference is the earnest money is refundable if the buyer terminates the contract during the due diligence period.
In our market, a buyer typically performs a home inspection, pest inspection, radon test, property survey, and obtains a loan during the due diligence period. But, the buyer is not limited to those items. They can do air testing, lead-paint testing, underground storage tank tests, mold testing, etc. It’s the buyers time for any and all inspections. It’s also a time when you can negotiate with the seller for inspection items, bring in contractors for quotes, and meet with the homeowners’ association to ask questions. Should the buyer wish to terminate the contract during the due diligence period they can with written notice. If this occurs the buyer would receive their earnest money back, but would lose their due diligence fee.
Should a buyer complete the transaction, the due diligence fee and earnest money will be credited towards the purchase price. These credits would appear on the Closing Disclosure provided by the buyer’s lender and attorney.
Below we outline more details about due diligence and how it works during a real estate transaction.
Q: What is “Due Diligence”?
A: “Due Diligence” is the buyer’s opportunity to engage in a process of further investigation of the property and the transaction as described in the Offer to Purchase form within a period of time agreed to by the seller and buyer.
Q: What might the buyer investigate during “Due Diligence”?
A: The buyer will want to inquire about anything bearing on a decision to either move forward with the contract or to terminate it. Paragraph 4 of Form 2-T outlines many, but not all, common considerations of the “Due Diligence” process such as home, pest, and septic inspections, property survey, appraisal, title search, loan qualification and application, repair negotiation, etc.
Q: How much time is allowed for the “Due Diligence” Process?
A: The amount of time is negotiable but the period begins with the effective date of the contract. Paragraph 1(j) of Form 2-T will state the period’s agreed upon ending date. Buyers should be certain to negotiate enough time to fully complete their inquiries – especially as related to appraisal and loan approval and any repairs discovered during property inspections.
Q: What is the “Due Diligence” Fee?
The fee, if any, is negotiated and paid by the buyer to the seller for the right to conduct “Due Diligence”. The amount of the fee may be influenced by such matters as the market for the property, number of days on the market, personal circumstances of buyer and seller, and the length of the “Due Diligence” period.
Q: Is there a limit to the repair items the buyer can ask the seller to perform?
A: No. The buyer is free to ask for any number of things; however, the seller is not obligated to agree to any of them. Repairs, if any, are completely negotiable.
Q: If the buyer is not satisfied with the seller’s response, or lack thereof, to repair requests, what can the buyer do?
A: The buyer can terminate the contract or agree to move forward without the repairs.
Q: Must the repairs be completed by the seller before the end of the “Due Diligence” period?
A: No, but the seller is required to complete any repairs in a good and workmanlike manner prior to the settlement date. Failure by the seller to complete the repairs could result in a breach of the contract. (See paragraph 8(k) and (l) of Form 2-T).
Q: Must the seller allow the buyer to inspect the property to verify the repairs have been completed even if the “Due Diligence” period has expired?
A: Yes. The buyer has the right to verify the repairs have been completed satisfactorily, during or after the “Due Diligence” period. The buyer also has the right to do a final walk-through. The seller’s failure to permit the buyer to verify repairs or to do a final walk-through is a breach of the contract.
Q: What happens at the end of the “Due Diligence” period?
A: The buyer must make a decision to move forward with the contract or to terminate, so it’s a good idea to discuss progress with the buyer as the end of the period approaches. There is a “Warning” to the buyer in paragraph 4 of Form 2-T advising termination if the seller does not agree to a requested extension of the “Due Diligence” period. The buyer’s loss of the right to terminate for any or no reason then places the earnest money at stake. To avoid any misunderstandings, provide any extension agreed to by the seller to the buyer in writing.
Q: If the buyer decides to terminate the contract under the “Due Diligence” clause, must the seller agree?
A: No. It is the buyer’s sole decision to make, assuming it is made during the “Due Diligence” period and not afterward. The termination is a notification to the seller, and must be in writing, but the buyer does not need the consent of the seller. It is a unilateral decision made by the buyer for any reason or no reason at all. The buyer typically gets back the earnest money but not the “Due Diligence” fee, unless otherwise negotiated.
If you have any questions pertaining to any part of a real estate transaction please don’t hesitate to get in contact with us – we would love to help you!
Information sourced from North Carolina Real Estate Commission.
(828) 232-4030 | 26 College St. | dixonpacifica.com
Market Report for June 2017
Days on the market shrunk significantly from May to June, as is traditional in our market, with the change in average price continuing to show double digit growth over last year. Despite a large number of sales, more inventory has come to the market, as we predicted, giving us a slightly larger supply of homes than last month. The hottest market segment in Buncombe County has dropped $5o,ooo, though the median sales price is up slightly since last month.
So, what’s in store for the rest of the summer? We saw a slow down during the July 4th holiday weekend and predict the market will continue to cool off as the summer gets hotter and school starts back. This should mean slightly lower list to sales price as demand is slightly less, and months supply of homes and days on the market should continue ticking up incrementally, which will indicate a healthier and more steady rate of growth in the Asheville and Buncombe County markets.
Buncombe County Market Report
Asheville City Market Report
If you found this data helpful and would like a more detailed look into a specific neighborhood or zip code, contact one of our agents or call the office at (828) 232-4030. We are happy to provide you the information you need to Move Smarter.
Tiny House, Big Idea
Hand to chin, Jennifer eyed the space where her silver SUV was parked.
“Could I build a tiny house right here?”
Last year, she fell in love with the house in Kenilworth and its view of the lake. After moving in she added an outdoor room — the perfect playroom for her two-year-old grandson.
Gazing from this room at the pines reflected in the water below, she smiled. “Blissful.”
But living here could be even better, she mused, if her daughter, son-in-law, and baby grandson were right next door.
She makes a good point.
With scant rentals available, and costs prohibitive for many first-time homebuyers, a tiny house may be a smart option. Costs can be kept low, around $15,000, but quickly rise with the quality of materials used.
Smaller homes are catching the imagination of many, including downsizing Boomers and Millenials just starting out.
Where did tiny houses start, and just how tiny are they?
‘Wee Houses’ began in 2003 as affordable alternative housing.
In North Carolina, a tiny house must be at least 120 square feet, but anything under 500 square feet is considered tiny. A typical storage shed is 100 square feet.
City of Asheville rules allow homeowners to build a small house next to the main one. However, zoning regulations, HOA bylaws, environmental, and other restrictions apply, so if you’re thinking about building a tiny home, do your homework and ask your real estate agent for more information.
Tiny houses can be site-built and made to be “grow-able,” to accommodate the homeowners’ changing needs.
For Jennifer, building a tiny house at the top of her driveway would mean a visit from her grandson could be only steps away, not a half-hour drive. And that could create a living arrangement to benefit the whole family.
Written by Suzanne Arthur, Broker, REALTOR, and Kenilworth neighbor. Connect with Suzanne at firstname.lastname@example.org to see if a tiny house may be a good (and legal) choice for your property, and keep up with all of Asheville’s local happenings by following @suzannearthur_realtor on Instagram.
Market Report for May 2017
The hottest market segment continues to hold steady at $400-499k. This is due, in large part, to the significant (though less drastic than April) change in average price. Many potential sellers aren’t listing their $300-399k homes despite the increase in value because the homes in the $400-499k range have increased at the same percentage. As you can see, this short supply is also pushing down the months of inventory and days on the market quite significantly over last month and last year. We are regularly seeing homes go under contract on the first day with multiple offers over asking price. We expect similar buying conditions but a larger supply of homes next month as schools let out and summer moving season begins.
Buncombe County Market Report
Asheville Market Report
For more information about our local markets, feel free to reach out to our agents by email or call our office at (828) 232-3040. We aim to ensure you have all the information you need to Move SmarterTM and make the best buying and selling decisions.
Market Report for April 2017
Buncombe County Market Report
Asheville Market Report
If you’d like additional information about this data or want a more in-depth look at a specific neighborhood, contact one of our agents or call us at (828) 232-3040. We’re always happy to equip you with the knowledge you need to make the best real estate decisions.
Market Report for February 2017
The February numbers are in and much of what they have to say confirms our 2017 predictions. Median sales price is up significantly over last year and can be explained by the continued trend of low inventory.
Asheville Market Report
Buncombe County Market Report
To see what the numbers look like in your neighborhood, our agents are happy to provide a more in-depth analysis.
3 Simple Steps to Hiring the Best Moving Company
Hiring a mover can be a daunting experience especially when simultaneously trying to organize the other aspects of moving to a new home. After more than a decade of experience coordinating cross-country relocations and helping folks with local moves, I’ve developed a list of tips and interview questions to help you find the most professional mover so you have the best moving experience.
1. Decide what type of move you need.
Intrastate or Local
For intrastate moves (moves within the same state) visit your state’s website for a list of licensed and insured movers. In North Carolina, you can find carriers who are in compliance with the state’s regulations here.
Interstate or International
For moves across state lines (interstate) or internationally you can search carriers using the federal motor carrier safety administration’s site.
2. Determine how much assistance you want with your move.
There are a few different levels of service and pros and cons to each depending on the specifics of your move.
Full Service Move
Choose this option when you want the moving company to safely pack every item in your home, supply all the boxes, bubble wrap and packing paper, pad and shrink-wrap all furniture, load, move, unload the truck and unpack as many of the boxes as you want, wherever you want.
This is the most commonly requested service. You pack and box your belongings. They pad and shrink wrap your furniture, load, move and unload the truck at the desired location.
Load & Unload Only
Movers can help you to load or unload your rental truck, storage pod, ABF truck, storage unit or garage. This option is most useful to people who are able to drive a rental truck or who want to use a freight service. While you can save money using this option, you take on the responsibility for your belongings while they are being moved. The moving company, truck rental or Freight Company will not be responsible for any damage while in transit.
Some companies will recycle boxes and packing materials after use. They can help you to obtain free, clean, sturdy and inspected recycled boxes or plastic bins to help lessen your move’s impact on the environment and your wallet. Some moving company’s trucks also run on bio-diesel to reduce emissions.
3. Interview Your Mover.
Once you have determined the type of move you need and the service level you desire, there are a few questions to ask each mover you interview to ensure everyone is on the same page.
“Do you work for the mover or are you a broker?”
Brokers play an important role in helping customers match up with moving companies. Keep in mind, however, that a broker cannot give you a binding estimate and a broker is not responsible for loss or damage.
“Do you give binding quotes?”
A mover or broker may give you a quote over the phone, but those are generally not binding. Upon reviewing your items in person, a mover might then give a binding or “not to exceed” quote. However, brokers don’t typically give binding quotes.
“Does the quote include extra charges?”
For example – flight charges, long carry charges, appliance charges, parking charges, storage charges, fuel charges, awkward objects, etc. If you have a piano, you should let them know up front. Ask them if they have equipment to help with heavy and awkward items.
“Will my items be transferred?”
Long distance moves can sometimes require your items be transferred to another truck. This extra handling increases the chance that damage may occur.
“What forms of payment do you accept and on what terms?”
I do not recommend you hire a mover if they only accept cash. Be sure you are clear about the amount that is due on delivery versus the deposit amount, and whether deposits are refundable. Most companies that have a merchant account will accept credit cards, so be sure to ask if credit cards are an option.
“What type of insurance is included in your quote? What else is available to me?”
Basic coverage is 60 cents per pound but your moving company may offer an upgrade at a reasonable price. You can also work with third party insurance providers to cover the move.
“What is the process if something were to break or is missing? Who’s responsible?”
This is a follow-up to the previous question that clearly breaks down who is responsible for what. If you’re discussing a self-service move, you may not get reimbursed for something that you packed poorly. Wherever the responsibility lies, it’s better to know in advance.
No matter which type of move you are facing, a little planning and preparation can go a long way to reducing stress. Whether you are planning a local move or a long-distance move, using an independent local moving company, a national carrier or going DIY, these tips can make your move a smarter, safer and smoother experience!
Written by Jen Woodward, Broker, REALTOR with special thanks to Sean Lallouz, owner of Dry Ridge Moving and Transportation LLC. With more than a decade working in real estate and relocation, Jen utilizes her personal and professional moving experience to assist buyers and sellers in the Asheville market and beyond.
Holly Martin Named Top 100 REALTOR
Broker Holly Martin earned a distinguished spot as one of Asheville’s Top 100 REALTORS of 2016. PlumDog Financial, an Asheville area mortgage lender, releases this designation annually based on transaction volume data from the Asheville Board of REALTORS’ Market Share Report. They praised Holly and the other top REALTORS for their “hard work and dedication to our community development” and for providing home ownership and satisfaction to thousands of Asheville area residents.
Holly was also DixonPacifica Real Estate’s Top Producer and Sales Leader for 2016. Says DixonPacifica owner, Tad Dixon, “We are so proud of all that Holly has accomplished this year,” which includes nearly doubling her 2015 sales volume, “and we look forward to supporting her as she continues to grow her business.”
Market Report for January 2017
January saw predictably steady market growth with a slight increase in average list to sales price as well as a slight decrease in months of inventory. However, there was a significant uptick this month in change in average price. This reflects the greater volume of homes sold in a higher price bracket than in previous months more so than individual home prices drastically increasing. We believe the trend of greater sales in higher price brackets will continue this year as more people move into the Asheville-Buncombe market from other markets.
Asheville City Market Report
Buncombe County Market Report
Our agents would be glad to give you more information about our market as a whole or your individual neighborhood or area of interest. Send an email or give as a call at (828) 232-4030 and we’re happy to give you more insight into current trends.
Market Report: 2016 Year in Review
Compared to last year, home prices in the NC Mountains MLS service area increased 9.1%. Buncombe County experienced a 10.2% increase and Asheville 13.7%. Buncombe County’s median price is currently $253,400 and Asheville’s is $270,000.
The average person stays in their home for five years. If you purchased a $250,000 home in the Asheville area in 2011, the Federal Housing Finance Agency’s housing price calculator says your home would be worth $308,724 at the end of 2016, which is a gain of 23.5%.
Closed sales increased 6% over the previous year. Buncombe County and Asheville accounted for a high percentage of sales increase in 2015, so while sales still increased they were lower as a percentage to other neighboring counties. Buncombe County experienced a 2.3% increase in sales during 2016.
A good sign for our market is that sales may have been higher if not for the lack of inventory. We have plenty of buyers looking for homes, but they are struggling to find the right property. The availability of active listings was down year-over-year in 2016 by 1.6%. One thing we are watching carefully is if low home supply is a drag on the number of sales in 2017. Buncombe County and the city of Asheville have the lowest supply of inventory in the entire MLS. Currently Buncombe has 3.2 months supply and Asheville 2.6 compared to the WNC MLS average of 5.4 months. Four to five months is typically considered healthy. The good news for sellers in this scenario is supply vs. demand will continue to push prices higher.
One word that’s almost vanished entirely from our real estate vocabulary is “distressed.” For the last few years distressed homes, foreclosures and short sales, were an everyday reality in our market. In 2016 the percentage of distressed sales fell 24.2% and made up only 1.4% of total sales.
Looking towards the remainder of 2017, we believe several things will impact our community’s real estate. With the stock market hitting new highs, many investors could look for portfolio diversity in real estate. Since our market is a hot vacation destination, those dollars could find their way here. Experts believe Baby Boomers may take profits from the stock market and buy real estate they can rent and enjoy personally in their retirement. Boomers are expected to make up one-third of all buyers this year.
Another positive is our region’s economic strength. With Buncombe County’s unemployment rate the lowest in North Carolina and our tourism numbers consistently rising, our region’s economy should remain strong for the foreseeable future. Our economic fundamentals are strong so housing prices should remain stable even if geo-political situations arise or interest rate increases put pressure on the market.
All data sourced from North Carolina Mountains MLS (January 2017)
PRICE- Search for Properties