Real Estate 101 Buyers Due Diligence
Real Estate 101 Buyers Due Diligence
Real Estate 101 page 5 is associated with the St George Real Estate Purchase Contract. The next section of the REPC deals with the responsibility of the buyer. The buyer can opt to have the deal subject to his due diligence (research). The main portion of this section lists various type of potential problems that can occur in a real estate transaction. There is a separate form created by the Utah Association of Realtors for use by St George real estate agents that deals specifically with buyers due diligence items. This form can be very helpful to the real estate buyer. If the buyer discovers something they are not comfortable with before the due diligence deadline, they can walk away from the deal. They should also receive their earnest money back. If the buyer has concerns discovered during the due diligence period they need to address them in writing, usually in the form of an addendum. The seller has the opportunity to address and correct the buyers concerns. In some cases the buyer may still be able to walk away with their earnest money after the due diligence date has passed, if their concerns are not corrected as per the addendum. As clarified in previous sections, I often times use the term St George Real Estate agent, as that is the area I work in, in reality the REPC is designed for use not only for Real Estate in St George, buy the entire state.
Another condition that is an important part of any real estate transaction is the appraisal of the property. Basically what this section says, is that the house has to appraise for the purchase price agreed upon. If the house does not appraise for the agreed up price, the buyer can walk away from the deal. In some cases, the buyer can put a little extra money down, or the seller may reduce the price to help the buyer obtain the property. Some times both buyer and seller make some concessions to make the deal happen. This does not mean that either party “has” to make up the difference. Any increase in down payment, or reduction in price is totally voluntary. The St George real estate market has some of the best appraisers in the state.
The financing of a property in the St George real estate market area is key to most home buyers acquiring the property. If they are unable to obtain financing they will not be able to buy the house. If the person buying the home is unable to finalize their financing they can walk away from the deal with their earnest money. In order to walk away with their earnest money, the buyer must notify the seller prior to the financing deadline. The buyer decides if he would like to make the transaction subject to financing or not. The seller also has to agree to this in the initial offer. If the person buying the home is a cash buyer they would not be interested in this stipulation. The buyer can walk away from the deal prior to the financing and appraisal deadlines with their earnest money as long as they do so prior to the deadlines specified in the agreement.
If a buyer decides to abandon a transaction after the appraisal or financing deadline, they can do so, but they will more than likely lose their earnest money. The earnest money in many cases is considered liquidated damages. When the home goes under contract and is taken off the market the seller believes he has a deal. If he has to place the home back on the market, he has lost exposure in the market, and a potential sale. Agents in the St George real estate area understand the importance of the real estate appraisal.
The REPC or real estate purchase contract is a legally binding agreement. We use it in the St George real estate market but it is, also used throughout the entire state of Utah. It is important that both parties understand the implications of the agreement they are entering into. The information provided on this site is not to substitute for obtaining legal advice. As with any legal transaction if you have concerns about what you are signing you should contact an attorney. Real Estate agents are not lawyers and are not allowed to give legal advice. As I have mentioned several times throughout this section the REPC we use is not only valid for real estate in St George, but it is designed to be used for the entire state of Utah.