The amount of time where you can get out of a Purchase and Sale Agreement and still get your Earnest Money Deposit back is specified as the “Due Diligence” period in Georgia (Florida calls this an “Inspection Period”). Essentially, the Due Diligence period is the first few days after the contract becomes binding. A contract is “Binding” when both the Buyer and Seller have agreed to the terms, signed the contract and the complete contract has been delivered to both parties. The date that this happens is called the Binding Date and it marks the beginning of all contingencies on the contract, including the Due Diligence period. The Due Diligence period gives you as a Buyer the “Right to Inspect” the property.
Many Buyers ask the Seller for a ten-day Due Diligence period, but the length of the Due Diligence period is negotiable and we put it into the Purchase Offer. As your Buyers Agent, I would try to get as long of a Due Diligence as you require. I typically try to get my Buyer clients 10 – 14 days for home purchases and 21-30 days for land purchases, or even longer if the land has to be resurveyed. The Listing Agent is going to try to get as short a Due Diligence period as possible as they represent the Seller. If something comes up that requires further inspection or if any issues are found and you are not able to reach a satisfactory agreement about the issues found during the Due Diligence period, all parties can mutually agree to extend the Due Diligence period. Generally, when a satisfactory resolution has not been found by the end of Due Diligence, it is in everyone’s best interest to extend the timeline.
For many Buyers, “Due Diligence” is synonymous with “home inspection,” and while having a good home and termite inspection and having the land surveyed by a licensed surveyor can all be a part of Due Diligence, there are other issues that should be considered during this period. In addition to having a home inspection conducted on the property, it is also important to inspect the neighborhood, because while many features or conditions of the home can be changed, the neighborhood cannot. Some properties will also have “Covenants & Restrictions” attached to the land, and you will want to read through those to make sure that you are comfortable with the restrictions and that you can do what you want with the property. Some things to consider investigating during the Due Diligence period include proximity to any places or facilities that you might find troublesome such as a prison, cemetery, chicken farm, hog farm, airport, quarry, or landfill. Additionally, you might also want to find out more information about your potential neighbors, including performing a violent sex offender search at the Georgia Bureau of Investigation website. It’s also a good idea to research local schools, crime rates, and government and make sure that you are comfortable with all of these.
In the event you are buying a lot or land with no structure on it, you may want to use the Due Diligence period to get a soil test to ensure the soil “percs” for a septic tank drain field, and has a drinking water source, a way to get electricity, phone and internet to it, etc.
In the event that any inspections do not go as well as you had hoped, or in the event that you have simply changed your mind during Due Diligence, you are able to terminate the Purchase and Sale Agreement and get a full refund of your Earnest Money Deposit provided you terminate within the Due Diligence Period. Although you are not required to provide a reason for terminating during Due Diligence, most of the time the Listing Agents will want to know.
I hope that helps explain Due Diligence!
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