Q: Today I am answering a question that I typically get for my buyers. So this question is can we offer a low due diligence fee?
A: Well generally no, unless the home has been on the market over two to three weeks and there are no competing offers. If you haven’t purchased a home in the past eight years, then this may be new to you. It’s a non-refundable deposit you pay the seller to take their home off the market to give you a chance to make sure you want to buy it. And of course during that time you’re doing inspections and appraisal. Another buyer could put in a backup offer, but they cannot bump you out of your primary position. So it is a very important fee to both buyer and seller. You can walk away for any reason or no reason at all but you will forfeit this fee. I am seeing this fee anywhere between $1,500 to $5,000 depending on how long the home has been on the market and whether there are multiple offers, this is almost as important as the price to the sellers and their agents. This tells the seller how committed you are to the home, and how likely it is that you will make it to the closing table. It’s your skin in the game ,you will get this back if you buy the home. Which the vast majority of my buyers do, so if you want this home your best option is offer as high as you can. So in short, can we offer a low due diligence fee? I wouldn’t recommend it, unless you don’t love the house. But then why offer if you don’t let the house, right? Again if the house has been on the market for a while and there no competing offers, of course. We will offer the lowest fee we can to eliminate the risk for you. But if you’re in multiple offers you’re competing with other buyers who are in love with the same home. And so you have to compete with more skin in the game. I will coach you through it when the time comes. But be prepared that’s one of the hardest decisions buyers make when offering on a home is how much they will offer the seller in due diligence
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