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Due Diligence

We’ve all heard the term “due diligence” when it comes to contracts and corporate mergers. But it also applies to buying and selling homes. And it’s pretty serious.

Joan Herlong, owner and CEO of Joan Herlong & Associates Sotheby’s International Realty, says due diligence is something every Realtor in South Carolina should fully understand.

Strict due diligence means a buyer and seller must negotiate a period of time for the buyer to do their due diligence on a home they’re interested in buying, as well as a termination fee if due diligence gives rise to deal-breaking issues.

Or as Herlong explains it, “The buyer has the right to do all the inspections they want, usually in a 10- to 14-day period. The seller, in turn, must make the home available for those inspections within a reasonable notice period.”

Of course, a seller can convince a buyer to waive strict due diligence, Herlong says. But how?

“Have your home inspected — and make the recommended repairs — before taking it to market.

But there’s another advantage: Inspecting and repairing in advance gives the seller leverage to negotiate a good, strong termination fee with the buyer.

And while fair termination fees are a function of the market and the list price, they can range from $1 to five or even six figures, she says.

Finally, termination requires written and signed notice of termination AND delivery of the fee by the agreed-upon termination date and time.

“If you don’t do both of those things before the due diligence period expires, you are buying the house,” Herlong says. “You can’t just say you’re terminating. You have to do those two things. If you don’t, you’ll need a lawyer.”


This article originally appeared in the Greenville Journal in June 2023.

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