How long should a due diligence period last?

By
Real Estate Agent with Better Homes and Gardens Real Estate Metro Brokers

Gues diligence in a real estate contract by Richard Weisser.One of the terms commonly addressed in a real estate offer is the length of the due diligence period.

The due diligence period allows the buyer to make all necessary inspections and investigations about the condition of the property and the neighboring area.

A seller does NOT have to agree to ANY amount of time, but most buyers would either walk away or offer a lower price.

ANY period of time can be negotiated between a buyer and a seller. Typical number range from 7-14 days for single-family residential properties and substantially longer for raw land, commercial, or multi-family parcels.

Keep in mind that a seller is keeping the property off of the market during this time and has an interest in "moving things along."

Buyers should be allowed a reasonable amount of time to determine if the property is suitable before laying out thens of thousands or hundreds of thousands of dollars.

Buyers should move expeditiously and methodically, and NOT put off critical inspections to the last minute. It is better to have sufficient time to address all of the buyer's concerns without the need for termination the contract.

So how long should a due diligence period last?

As long as is agreed to by all parties to the contract!

 

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  1. Angelica Blatt 09/15/2013 06:14 AM
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Tammy Lankford
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Your Lake Sinclair Expert (706-485-9668)

Recently had a seller only give 5 days.  Honestly I wish we were like other states where it costs actual money and the fictional $10

Sep 14, 2013 09:00 PM #6
Rainmaker
211,937
Yvette Chisholm
Long & Foster Real Estate, Inc. - Rockville, MD
Associate Broker - Rockville, MD 301-758-9500

It really depends on what needs to be inspected.   If there is a well and septic system, it could be dependent on weather and the labs or sewage companies and the time they may need for research.   If someone is building or wants to do a tear down there might be meetings and surveys and other issues involved.  

Short term contingencies, should be just that short term.   When can the seller feel confident their home is sold?   After the deed is recorded and the money has cleared the bank account.

Sep 14, 2013 09:14 PM #7
Rainmaker
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Chuck Mixon
The Keyes Company - Cutler Bay, FL
Cutler Bay Specialist, GRI, CDPE, BPOR

Great post Richard once again.  I was expecting an answer to the question,  your answer was dead on target , but not what I was expect. I agree that even with a contact  there is not correct answer for all deals. It is what both parties agree to!

Sep 14, 2013 09:23 PM #8
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Praful Thakkar
Keller Williams Realty - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Richard, now-a-days, sellers have a different take on 'how long'. If they get an offer, they want to wait for another offer even when the first offer response time is expired!

Of course, the due diligence period depends on the agreement of both parties.

Sep 14, 2013 09:52 PM #9
Rainmaker
1,107,056
Ginny Gorman
Phillips Post Road Realty ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in North Kingstown RI and beyond

Richard, interesting that is somewhat flexible in your area...it is time is of the essence in 10 business days in ours & that includes response from the seller to the buyer.  And yes, it can be extended but rarely is.  Letting buyers know to do it right away is so important.

Sep 15, 2013 04:06 AM #10
Rainmaker
301,056
Paula Bradfield
Keller Williams Performance - Salida, CO
Your Salida Colorado and Down Valley Realtor

Out here we use 21 days. The main reason is that we have well and septic inspections as the norm. On in-town homes, 10 business days to inspect with 3 days for objections and 3 for resolution. When I was in Chicago it was 7 days, including objections.

Sep 15, 2013 05:04 AM #11
Rainmaker
164,865
Angelica Blatt
Teles Properties - Monterey, CA
Selling the Monterey Peninsula over 15 years!

Our contract specifies 17 days..which is usually enough time although I have noticed that the appraisal often needs a few extra days or so. Currently, I have a buyer who is not quite understanding this time period and it is not for my lack of my explaining it to him via-all possible ways that we communicate. Thanks for your timely post and reminder.

Sep 15, 2013 06:10 AM #12
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Richard Weisser
Better Homes and Gardens Real Estate Metro Brokers - Newnan, GA
Richard Weisser Coweta Newnan Homes for Sale

Suzanne...

Our market is so hot that most sellers push for less. Thanks.

Debbie...

Some of our properties have wells and septic systems which might take a little more time. TYVM.

Sharon...

We have a blank space that must be filled in with something! TY

Tammie...

That seems a tad on the short side but according to the comments is normal in many areas! Thanks so much.

Jeanne...

I would say that's the norm here too. Thanks.

Tammy...

It could be logically asserted that too short of a time can lead to more terminations. Buyer's feel pushed and will readily walk if any concerns remain. Thanks my friend.

 

Sep 15, 2013 06:22 AM #13
Rainmaker
125,765
Andrew Payne Realtor® Richmond VA Homes For Sale~804-938-5257~
Long & Foster Strawberry Street - Richmond, VA
Richmond, VA, Real Estate, SRES®, NAR Green

It's essential for us as agents to explain what due dilligence is to all buyers---especially to first-time buyers.  There's a default period written into our Purchase Agreement.  However, these periods can be negotiated.

Sep 15, 2013 06:48 AM #14
Rainmaker
894,710
Michael Setunsky
Michael's Commercial LLC - Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Richard, due diligence periods are quite common in commercial real estate. I found that no matter how long the period, it will normally take that long. If they ask for 30 days, it will take 30 days and like wise for other time periods. My job is to make sure nothing is left to the last minute.

Sep 15, 2013 07:16 AM #15
Rainmaker
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Matt Kombrink
RE/MAX Great American North - Saint Charles, IL
Top Local Realtor, Trusted Advisor

Thought provoking question, Richard.  Luckily I have not run into a situation yet where the due diligence period was out of the norm.  You're right though, however long the buyer and seller agree on is the answer.

Sep 15, 2013 07:25 AM #16
Rainmaker
1,315,923
Richie Alan Naggar Author PEARLS SERIES of books
People first then business! Ran Right Realty Riverside, Ca - Riverside, CA
on LIFE and LOVE plus Real Estate too!

With me it is more about the people I am dealing with and the sense or comfort level involved...this affects the time table. If I believe you are who you say you are and can verify it, then we work together as long as it takes as long as we work on it daily to make it happen...good post

Sep 15, 2013 07:32 AM #17
Rainer
247,351
Frank Castaldini
Coldwell Banker - San Francisco, CA
Realtor - Homes for Sale in San Francisco
As you've pointed out, the amount of time is what is negotiated. I encourage sellers to have inspections so that buyers have more information about a property. This can lead to short of no inspection request.
Sep 15, 2013 07:36 AM #18
Rainmaker
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Nina Hollander
RE/MAX Executive Realty/Charlotte, NC - Charlotte, NC
Your Charlotte/Waxhaw/Fort Mill Area Realtor

As I always tell my buyers, due diligence period and due diligence fees are a negotiated item between buyer and seller and there are no hard and fast rules.

Sep 15, 2013 08:03 AM #19
Rainer
34,183
Charlotte Luxury Real Estate
Keller Williams - Ballantyne Area - Charlotte, NC
Eli Magids
Hi Richard, Here in NC ,we have to get loan approval before the end of due diligence ,so I try to make it as long as I can! Best, Eli
Sep 15, 2013 09:48 AM #20
Rainmaker
1,914,496
Gabe Sanders
the BlueWater Realty team specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

My sellers all want less than 10 days and the buyers all want more.  So, typically, unless there are complications we usually agree on the 10 day value.  But, as you say, it will be what is agreed upon by both parties.

Sep 16, 2013 04:34 AM #21
Rainmaker
1,012,583
Gary L. Waters, Broker Owner Waters Realty of Brevard, LLC
Waters Realty of Brevard, LLC - Melbourne, FL
Personal Service, always.

I am with Gabe above. 10 days seems to be reasonable but again, ot is what is agreed to by the parties.

Sep 16, 2013 12:37 PM #22
Rainmaker
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Troy Erickson
Diverse Solutions Realty www.ChandlerRealEstate.weebly.com - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

Ten days is pretty standard for residential purchase contracts here in Chandler Arizona.  Sometimes I wish it were a little longer because like you said, people are spending hundreds of thousands of dollars on a home, they should have time enough to check it out to make sure they are getting what they think they are paying for.

Sep 17, 2013 01:06 PM #23
Rainmaker
280,101
Marnie Matarese
J Wood Realty - Sarasota, FL
Showing you the best of Sarasota!

Our contracts usually say 15 calendar days or 10 working days but I have had several sellers recently whose homes are in excellent conditon allow only 5-8 working days because they do not want the buyers to continue shopping for homes after going to contract on theirsl

Sep 18, 2013 01:17 PM #24
Rainmaker
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Gay E. Rosen
Houlihan Lawrence - Larchmont, NY
Honest, Hardworking and always Professional!

Hi Richard - in Westchester,  our due diligence is performed prior to the contract being signed....  

Sep 24, 2013 07:37 AM #25
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