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  • Writer's picturemhpaugusta

Important Terms: “Due Diligence Period”

Have you ever wondered what happens once you’ve secured a purchase agreement on a

home? Are you 100% locked into the agreement? What if there were things about the house

that you didn’t notice at first. Are you allowed to change your mind? Well hopefully you asked for

a due diligence period that gives you time to confirm that you actually do want to purchase the


The “Due Diligence Period” of a real estate contract is an agreed upon period of time after the

contract has been fully executed. It is a term that many people are familiar with, but are not

100% sure of what all it entails. The amount of time given is negotiable and must be agreed

upon by both parties. A general idea of a due diligence period is 7-14 days. This amount varies

due to market conditions. A shorter due diligence period will increase the strength of an offer

and is a tactic that is used when buying a home is highly competitive.

The due diligence period is important for protecting your earnest money should you find the

need to terminate the agreement. If you do choose to terminate within this time frame then you

are entitled to your earnest money in full. However, if the due diligence period has passed and

you terminate the contract it will be a breach of contract. At this point the seller would receive

your earnest money as damages for that breach.

The due diligence period was created for the buyer to have enough time to examine the

property. This would be the time to have any inspections done on the property. Depending on

the inspection reports you will also want to negotiate any repairs needed. If you are purchasing

an investment home now would also be the time to have any contractors come in and quote


In real estate, time is of the essence. Any inspections that you want to have done should be

ordered immediately after signing a contract. Being able to terminate a contract for any reason

and being entitled to your earnest money is a great contingency to have, but once the due

diligence period is over then you are locked in. Make sure you have your due diligence period

on the calendar, all inspections completed, and repairs negotiated before it ends!

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