Buying in North Carolina is different…
Whether you’re a seasoned home buyer in other states or completely new to the process, use the following info to understand the basics of the waterfront Lake Norman home buying transaction.
Is your broker working for YOU yet?
- Most states don’t require or even have a buyer representation agreement, but North Carolina does, and it’s serious.
- If a buyer doesn’t have a signed representation agreement, the broker is really working for the SELLER as a sub-agent. Therefore anything you tell them, is NOT confidential. If you said you would pay $50k more for the home, they have to tell the seller.
- As a buyer you will get a brochure “Working with Real Estate Agents” from your broker at first substantial contract to discuss the process. Most brokers will require the buyer sign an exclusive right to represent the buyer before even seeing a home.
Disclose what?
- North Carolina is a “Caveat Emptor” or “buyer beware” state.
- Most states require by law the seller to disclose everything about the property from renovations to roof leaks. If the seller knows about it, then it must be told to the buyer.
- North Carolina however, allows sellers to elect “No Representation” on the sellers disclosure form, this allows them to essentially say “no comment”, legally.
- But, if the seller told the listing agent a material fact (“Hey Jim, my roof leaks.”), the listing agent is then obligated to inform the buyer even if the seller chose “No Representation”.
Closing dates are attempted.
- In most other states the contract will have a “time is of the essence” clause, to make sure the contract closes on time and all deadlines are met.
- In North Carolina, aside from the “Due Diligence Period”, closing can be reasonably delayed by either party. Reasonable is about “2 weeks”. Though it’s important to note; a settlement date is agreed upon at time of contract. As the transaction progresses, there’s a chance the closing date may be mutually modified. That change will be reflected on the “agreement to amend” form.
- So always plan for some buffer time if you’re planning a move.
Escrow and Title companies aren’t used to close a transaction.
- North Carolina has real estate attorneys doing all of the closing activity (escrow funds, title searching, etc…)
- However, closing attorney’s are utilizing title companies to issue title policies relevant to the deal.
- This won’t have much impact on the buyer (as they weren’t involved daily on who was doing the work in other states).
- One thing to note is: the BUYER picks the closing attorney and pays the fees, title insurance, etc. This differs from other states where the seller has choice, and fees are split equally.
Earnest Money
- No big difference here from other states.
- 1% is “common” to put down. Though you can use this to make your offer more attractive by putting more down.
- This money is refundable if you walk away within the due diligence period.
Due Diligence Fee
- This is a BIG change and hot button with buyers.
- This is a “fee”, it is NON-REFUNDABLE. (though if you buy the home, it goes towards closing costs)
- It is your payment to the seller to take the property off the market for you to start inspections.
- If you choose on any day that the home isn’t for you, you lose ALL this money.
- The amount is negotiable and there is no common percentage.
Due Diligence Period
- Buyers will need to do all inspections and get the loan approved during this timeframe.
- It is negotiable during your offer to purchase, and unlike the closing date from above, time is of the essence for this…
- If after 5:00 pm on the deadline, you haven’t canceled the contract in writing, the seller may keep the earnest money if you cannot close. Wow ~1% can add up on a waterfront Lake Norman home, don’t miss this deadline!
These are just a few things to start thinking about. We can explain the process in greater detail in person.