By Elizabeth Putnam, Real Estate Broker | Mosaic Community Lifestyle Realty | Asheville & Western North Carolina
We're under contract! Time to celebrate? Absolutely. But don't put away your negotiating hat just yet.
Congratulations! You've accepted an offer on your home!
We've negotiated the purchase price, agreed on the terms, signed the contract, and we're officially under contract.
Woohoo! We're getting closer!
But before we start packing up the champagne glasses, there's another important phase of the transaction to navigate.
Welcome to the North Carolina Due Diligence Period!
This is the period when buyers investigate the property, conduct inspections, finalize financing arrangements, and decide whether they want to move forward with their purchase.
For sellers, this can be one of the more challenging parts of the process.
And I'm going to explain why.
What Happens During the Due Diligence Period?
In North Carolina, our standard Offer to Purchase and Contract (Form 2-T) gives buyers broad rights to investigate the property.
They can schedule inspections, arrange evaluations by specialized contractors, obtain repair estimates, review property records, and investigate other matters affecting their decision to purchase.
Inspections themselves are not generally required by North Carolina law, although certain lenders and loan programs may require specific property inspections or testing.
For example, a lender might require a wood-destroying insect inspection or water testing for a home served by a private well.
Beyond those requirements, the buyer typically decides which inspections to conduct. Most buyer's agents recommend beginning with a general home inspection.
And that can sometimes open the door to a whole lot of additional inspections!
What Does a General Home Inspection Include?
A general home inspection is a visual evaluation of the home's accessible systems and components.
Inspectors typically evaluate six broad areas:
- Interior: Walls, ceilings, floors, windows, doors, and other visible interior components.
- Exterior: Siding, trim, decks, porches, drainage, and other accessible exterior features.
- Structure: Foundations, framing, roof structure, and other visible structural components.
- Electrical: Electrical panels, accessible wiring, outlets, fixtures, and related components.
- Plumbing: Fixtures, visible supply and drainage systems, water heaters, and related components.
- Mechanical: Heating, cooling, ventilation, and other applicable mechanical systems.
This isn't an exhaustive list, and a general home inspection doesn't cover every possible issue.
That's why buyers sometimes choose additional specialized inspections.
What Other Inspections Might a Buyer Request?
Depending on the property, buyers may schedule:
- Radon testing
- Wood-destroying insect inspections
- Specialized HVAC evaluations
- Sewer line camera inspections
- Fireplace and chimney inspections
- Well inspections and water quality testing
- Septic system inspections
- Mold or indoor air quality evaluations
- Structural engineering evaluations
- Environmental testing, including lead-based paint or asbestos
In Western North Carolina, where we have a wide variety of homes, construction styles, and property conditions, the inspections requested can vary significantly.
A newer home in a planned community may have different inspection considerations than a hundred-year-old Asheville bungalow or a rural property with a well and septic system.
How Are Inspections Scheduled?
Some larger inspection companies offer a menu of inspection services and coordinate multiple inspections under one company.
They may schedule several inspectors to visit on the same day, which can make the process more convenient.
Other buyers prefer hiring separate specialists.
That might mean a general home inspector on Monday, a septic inspector on Wednesday, and an HVAC contractor on Friday.
The buyer generally controls which inspections they request and how they arrange them, subject to the contract's reasonable-access provisions.
Do Sellers Have to Allow Inspections?
Under North Carolina's standard contract, sellers are required to provide reasonable access to the property for inspections and other contractual purposes.
That doesn't mean a buyer has unlimited permission to conduct unreasonably invasive testing or damage the property.
But it does mean sellers should expect to accommodate legitimate inspection requests.
If there's a concern about an unusually intrusive inspection, we'll address that with the buyer's agent before the work begins.
What If an Inspector Causes Damage?
The North Carolina contract addresses the buyer's responsibility for damage resulting from inspections.
Buyers are generally required to repair damage caused by their activities or those of their inspectors and contractors, subject to exceptions for accepted professional inspection practices.
For example, a home inspector might probe wooden siding or decking for evidence of deterioration.
If the wood is already soft and a small indentation results from an accepted inspection technique, that may fall within normal inspection practices.
Similarly, a septic inspection may require removing soil to uncover tank lids. The soil should be replaced appropriately, but some temporary disturbance to the lawn may be unavoidable.
On the other hand, significant damage caused by an inspection isn't something a seller should simply be expected to accept.
We'll evaluate those situations if they arise.
Do Sellers Have to Leave During Inspections?
No. Sellers aren't automatically required to leave their homes during inspections.
However, I generally recommend giving the inspectors and buyers space to complete their work.
Home inspections can take several hours, depending on the property's size, age, and condition.
It's also customary for buyers to meet with their inspector near the end of the inspection to review general findings and ask questions.
I usually encourage sellers to step away during that portion.
Buyers need an opportunity to have an open conversation with the professional they've hired.
And frankly, having the seller standing nearby can make everyone a little uncomfortable!
Can the Inspector Tell Me What They Found?
This is a question I receive frequently.
The general answer is that the inspector is working for the buyer, not the seller.
The inspection report belongs to the buyer under the inspection engagement agreement, and the inspector generally shouldn't share confidential inspection information with the seller without appropriate authorization.
So even though it's your home, you may not receive a report directly from the inspector.
In fact, you may never receive the complete inspection report at all.
The buyer may choose to share the full report, relevant sections, photographs, or only the particular concerns they're asking us to address.
However, material property defects known to the agents still have to be handled according to North Carolina disclosure requirements.
When Will We Receive the Repair Request?
I wish I could give you a definite answer!
Sometimes buyers complete their inspections quickly and provide their requests within the first week.
Other times, an inspection identifies something requiring additional investigation.
Perhaps a general home inspector notices movement in a foundation wall and recommends evaluation by a structural engineer.
Or the inspector discovers moisture in the crawl space, and the buyer wants a contractor to investigate and provide an estimate.
Scheduling those specialists and receiving their reports can take additional time.
Most buyer's agents prefer to gather all relevant information before submitting a formal repair request.
That means we may receive their request early in the due diligence period.
Or we might receive it the day before the deadline.
Occasionally, we receive it on the very last day.
Not ideal, but it happens!
I'll stay in communication with the buyer's agent and do my best to learn when we should expect to receive their requests.
Nobody enjoys negotiating with a deadline looming over their head.
Before We Negotiate Repairs, Let's Talk About the Appraisal!
Here's something I like to keep a close eye on during the due diligence period: Has the appraisal been completed, and does the appraised value support our contract price?
Why does this matter?
Because the last thing I want to do is negotiate a substantial repair concession, reach an agreement with the buyer, and then discover that the property didn't appraise for the agreed-upon purchase price. Now we're potentially facing another round of negotiations!
Remember, we've already negotiated the original offer. We're now preparing to negotiate any inspection concerns. If the appraisal comes in below the contract price, the buyer may also want to revisit the purchase price.
And nobody wants to negotiate the same transaction three times if we can avoid it!
My Preferred Approach
When possible, I prefer to have confirmation that the appraisal has been completed and the value supports our contract price before we finalize any due diligence repair agreements or financial concessions.
This gives us a more complete picture of the transaction.
If the home appraises at or above the contract price, wonderful! We can focus our attention on the inspection findings and determine what, if anything, we're willing to offer.
But what happens if the appraisal comes in below the contract price?
Now we have two potential issues to consider:
- The buyer may be requesting repairs or financial concessions based on inspection findings.
- The buyer may also be facing an appraisal shortfall that affects their financing or the amount of cash they'll need to bring to closing.
Rather than negotiating these issues independently, I would prefer to understand the entire situation so we can evaluate the overall financial impact and develop a thoughtful response.
For example, it may make more sense to consider a modest purchase price adjustment rather than agreeing to both a substantial price reduction and a separate repair concession.
Or perhaps the buyer is willing and able to bring additional cash to closing, allowing us to focus solely on resolving the inspection concerns.
Every situation is different.
But What If the Appraisal Isn't Finished Yet?
Unfortunately, appraisal timing isn't always something we can control.
The lender orders the appraisal, and the report may not be completed before the due diligence period expires. I'm certainly not suggesting that we ignore inspection requests or allow important contractual deadlines to pass while waiting for an appraisal!
I'll stay in communication with the buyer's agent to understand where we are in the appraisal process.
If the appraisal is still outstanding and we need additional time to evaluate the entire transaction, we may discuss whether extending the due diligence period makes sense for both parties.
But any extension needs to be agreed upon in writing, and there are risks to consider when giving the buyer additional time to terminate.
Sometimes we simply need to move forward with repair negotiations based on the information available.
My goal is to avoid negotiating in pieces when we could be looking at the bigger picture.
The appraisal, financing, repair requests, and purchase price are all connected. Understanding how they affect one another helps us make better decisions and hopefully avoid unnecessary surprises as we move toward closing.
Here We Go Again: Round Two of Negotiations!
We've received the buyer's due diligence repair request.
Now what?
Well... it depends!
This is what I like to call Round Two of Negotiations.
The buyer may request that we complete certain repairs before closing.
They may ask for a financial concession so they can handle repairs themselves after purchasing the home.
Or they may request a combination of repairs and concessions.
Occasionally, a buyer won't request anything at all.
Wouldn't that be lovely?
But in my experience, unless we've established clear expectations about an as-is purchase, it's reasonable to prepare for at least some discussion about inspection findings.
Remember: The Seller Is Not Automatically Required to Make Repairs
Here's the important part.
Under North Carolina's standard Offer to Purchase and Contract, the property is generally being sold in its current condition unless the parties agree otherwise.
The seller isn't automatically required to make repairs or provide financial concessions simply because the buyer requests them.
But remember...
The buyer generally isn't required to proceed with the purchase during the due diligence period either.
If we decline a repair request, the buyer may decide to accept the home as it stands.
Or they may terminate the contract within their contractual termination period.
This is why due diligence negotiations require a little flexibility, good judgment, and an understanding of what matters most to both parties.
Why Good Property Disclosures Matter
I always encourage my sellers to be forthcoming about known issues with their homes.
This is important for several reasons.
First, accurate disclosures help buyers make informed decisions.
Second, they reduce the likelihood of surprises during inspections.
And third, they give us a valuable foundation when negotiating repairs.
Let's say you disclosed that your HVAC system was older and had required repairs.
Or perhaps you disclosed a known plumbing issue, prior water intrusion, or another condition affecting the property.
The buyer had that information before submitting an offer.
From a negotiating standpoint, I believe it's reasonable to remind the buyer that the condition was disclosed and should have been considered when they determined their offer.
That doesn't legally prevent them from requesting repairs or exercising their due diligence termination rights.
But it can be an important part of our negotiating position. My goal is to be transparent from the beginning so that buyers know what they're purchasing.
Nobody benefits from unpleasant surprises.
Repairs or Credits: Which Is Better?
This is one of my favorite questions because there really isn't a one-size-fits-all answer.
Sometimes completing a repair is the simplest solution.
Other times, a financial concession makes more sense.
Let's look at both options.
Option 1: The Seller Completes the Repairs
Some sellers are very handy.
They may have trusted contractors, friends in the construction industry, or the ability to coordinate repairs quickly.
Others may have already relocated and simply aren't in a position to manage repair work.
I have developed relationships with a variety of local contractors, and when requested, I'm happy to help my sellers coordinate estimates and repair arrangements.
Under the North Carolina contract, agreed-upon repairs must be completed in a good and workmanlike manner.
Depending on the work involved, applicable law may require licensed professionals or permits.
The repair agreement may also specify that particular professionals must perform the work.
If we've agreed that a licensed electrician, plumber, or other qualified contractor will complete a repair, we need to honor those terms.
I encourage sellers to keep invoices, receipts, permits, and documentation showing the agreed-upon work has been completed.
This helps us provide the buyer with evidence of the repairs before closing.
Option 2: Offer a Financial Concession
Sometimes a credit is easier for everyone. Rather than coordinating contractors and attempting to complete repairs before closing, we negotiate a dollar amount that the buyer can apply toward lender-permitted closing expenses.
The buyer then handles the repairs after taking ownership.
I particularly like this approach when sellers have already moved out or when the buyer wants to select their own contractors and oversee the work.
It can also reduce disagreements about the quality or scope of a repair.
However, seller concessions are subject to lending rules, and the buyer may not be able to use an unlimited amount.
We need to account for any concessions already negotiated in the original contract and confirm with the buyer's lender that an additional credit is permitted and usable.
But Here's Something Else to Consider...
Sometimes a buyer requests a $5,000 credit for an item that might cost $1,500 to repair.
In that situation, it may make more sense for the seller to complete the repair rather than provide the full requested credit.
That's why I prefer evaluating these situations individually.
The best solution depends on cost, timing, risk, the buyer's expectations, and what works best for you.
What Repairs Are Reasonable?
I generally approach inspection requests with a simple rule of thumb:
Health and safety concerns are usually on the table for discussion. Cosmetic requests are generally not my priority.
For example, I would take concerns about electrical hazards, structural issues, active leaks, or unsafe decking seriously.
On the other hand, I may be less inclined to recommend a concession for faded paint, minor cosmetic cracks, or outdated finishes.
But remember, everyone's tolerance level is different.
Something that seems relatively minor to one person may be a major concern to another. We don't necessarily know a buyer's non-negotiables until we begin discussing the inspection request.
My role is to help identify which concerns are significant, which may be relatively minor, and how we can reasonably move forward.
Don't Forget About the Appraiser!
Sometimes an issue that wasn't particularly concerning to the buyer becomes a problem with the lender.
I had a listing with an aging deck that had a hole in one section.
Interestingly, the buyer hadn't requested a repair.
But when the appraisal was completed, the appraiser identified the hole as a potential health and safety concern.
The lender then required that the condition be corrected before the financing could proceed.
That's an example of why certain repair issues deserve attention even when the buyer isn't particularly concerned.
Depending on the loan program and lender requirements, an appraiser may identify conditions that have to be addressed before closing.
That doesn't automatically mean the seller is contractually obligated to pay for the work, but it may mean the parties need to find a solution for the buyer's financing to be completed.
Managing Frustration During Due Diligence
I'm not going to sugarcoat this.
The inspection process can be frustrating for sellers.
You've already prepared your home, negotiated an offer, and agreed to sell.
Now inspectors are coming and going, contractors are evaluating things, and we're waiting for information that is largely outside our control.
It's not always fun.
And sometimes the inspection report identifies issues you didn't even know existed.
That's where a little perspective can go a long way.
Focus on the Forest, Not Every Individual Tree
I occasionally receive repair requests that contain a long list of items.
Some may be significant.
Others may be relatively minor.
And sometimes a buyer's agent has included what feels like just about everything in the inspection report!
Rather than getting frustrated by each individual item, I sometimes encourage sellers to consider the bigger picture.
What would be a reasonable total amount to offer to help the buyer address their concerns?
Would a financial concession be more practical than negotiating twenty separate repairs?
Could we agree on a solution that allows everyone to move forward without getting bogged down in the details?
Sometimes the most productive question isn't "What exactly is the buyer asking for?" but "How can we reasonably get this transaction to closing?"
That shift in perspective can make an enormous difference.
My Goal Is to Be Proactive, Not Reactive
I don't want to wait until we're under contract to begin thinking about potential inspection concerns.
During my initial listing consultation, I'm already looking for items that might raise questions.
If I notice something that could become an inspection issue, we may discuss addressing it before listing.
Or perhaps we simply obtain an estimate so we understand the potential cost if it comes up later.
For example, if an aging deck appears to need attention, knowing the approximate repair cost beforehand can give us a tremendous advantage if a buyer raises concerns.
We won't always anticipate everything.
But the more potential objections we can address upfront, the easier the due diligence process may become. When unexpected concerns arise, we'll review them, gather information when necessary, and determine an appropriate response.
When Should You Hold Firm, and When Should You Compromise?
This is where your personal circumstances become especially important.
Some sellers are in a strong financial position and have plenty of time.
Others are carrying two mortgages, relocating for a job, or dealing with circumstances that make a timely closing particularly important.
There's no single answer that works for everyone.
And it's not my place to tell you what you must accept.
Instead, I want to help you evaluate the potential consequences of each option.
What happens if we agree to the request?
What happens if we offer something less?
What happens if we decline completely?
What might it cost to put the home back on the market?
And how would that affect your plans?
I'll share my professional opinion, explain the risks, and help you work through the possibilities.
Ultimately, the decision belongs to you.
What If the Inspection Reveals a Major Problem?
Sometimes inspections uncover an issue that neither the buyer nor the seller knew existed.
Perhaps there's significant termite damage.
Maybe a foundation wall has shifted.
Or a contractor identifies substantial moisture intrusion or a structural concern.
Nobody wants to receive that kind of news about their home. But once we learn about a significant problem, we need to address it responsibly.
What Happens If the Buyer Terminates?
If the buyer decides to terminate and we return the property to the market, newly discovered material facts may need to be disclosed to future buyers.
In North Carolina, real estate brokers have an obligation to discover and disclose material facts.
Sellers may also be required to correct or update their property disclosure statements when new information makes an earlier disclosure inaccurate.
This is one of the reasons I encourage transparency throughout the transaction.
If we've learned that a home has a material defect, we cannot simply pretend the information doesn't exist because the buyer decided not to proceed.
And from a practical standpoint, buyers may become more cautious when they learn a property previously went under contract and returned to the market because of inspection concerns.
Sometimes the Best Solution Is to Address the Problem
If an inspection identifies a significant issue, I often recommend exploring the available solutions before deciding to let the buyer walk away.
Can we obtain a qualified professional's assessment?
Do we know the actual cost of repair?
Would the buyer accept a reasonable concession?
Would addressing the problem make the property more marketable if the transaction doesn't proceed?
The reality is that we don't know what we don't know.
But once we know, we should make thoughtful decisions about how to move forward.
That doesn't mean agreeing to every request.
It means understanding that a significant property issue may need to be addressed now or during a future transaction.
What Happens If We're Running Out of Time?
Here comes another important piece of the North Carolina due diligence process. The clock matters!
Under the standard North Carolina Offer to Purchase and Contract, the due diligence period generally expires at 5:00 p.m. on the agreed-upon date.
And that deadline is important.
If a buyer wants to terminate under their ordinary due diligence termination right, the required written notice must be delivered before that deadline.
When it appears we're running short on time, I'll contact the buyer's agent to find out what's happening.
Are we waiting for an inspection report?
Has a contractor been unable to provide an estimate?
Do we need additional time to evaluate the buyer's request?
If both parties are actively working toward a solution, I may recommend discussing an extension of the due diligence period.
Should Sellers Agree to an Extension?
Sometimes extending due diligence makes perfect sense.
It may give us enough time to obtain our own estimates, review complicated inspection findings, or finalize a repair agreement.
But an extension also gives the buyer additional time to exercise their due diligence termination rights.
That's an important consideration.
We'll weigh the advantages and disadvantages before agreeing to any extension, and the extension must be properly documented in writing.
What If We Don't Reach an Agreement Before 5:00 p.m.?
This is where the situation becomes more interesting.
If the due diligence deadline arrives and the buyer hasn't properly terminated the contract, their general right to terminate for any reason under the due diligence provision expires.
That doesn't mean all of the buyer's contractual protections disappear. Other contract provisions, addenda, or a seller's breach may still provide termination rights or remedies.
But simply being unhappy with the inspection results no longer gives the buyer the same unrestricted ability to terminate and recover earnest money.
If the buyer subsequently breaches the contract, the seller may become entitled to the earnest money deposit under the applicable contract provisions.
However, that money isn't necessarily released automatically.
What Happens If the Buyer Refuses to Release Earnest Money?
If the buyer and seller disagree about who is entitled to the earnest money, the escrow agent must handle the funds according to the contract and North Carolina law.
Depending on the circumstances, the funds may remain in escrow until the parties reach an agreement, be distributed pursuant to a court order, or be deposited with the clerk of court through the appropriate legal process.
This is not a situation where the listing agent simply decides who gets the money.
If there's a genuine dispute, the parties may need legal guidance.
Which brings us to an important reminder:
The goal is to understand the contract, protect your interests, and make informed decisions before disagreements become larger problems.
A Real-Life Example: When Negotiations Get Complicated
I once represented sellers in a transaction where the buyer's agent submitted a repair request that included nearly every item identified in the home inspection.
That's not something I encounter very often!
At the same time, we were discussing an extension of the closing date.
The buyers had verbally indicated that they were agreeable to extending closing, but that agreement hadn't been formally documented.
As negotiations continued, the buyers attempted to tie the requested repairs to their willingness to extend the closing date.
Suddenly, two separate issues had become part of the same negotiation. My sellers had some decisions to make.
Should they agree to repairs they weren't comfortable completing in exchange for additional closing time?
Should they hold firm and make arrangements to meet the original closing date?
What were the potential consequences of each choice?
We talked through the different scenarios and evaluated the risks.
Ultimately, my sellers decided they were not comfortable conditioning one issue on the other.
The due diligence period expired without a repair agreement, and my sellers made the arrangements necessary to meet their contractual closing obligations.
Was that the right decision?
For those sellers, yes.
Because they understood the consequences and made a decision they felt comfortable with.
And that's what matters.
There is never a guarantee of how another party will respond during negotiations.
We can anticipate possibilities, assess risks, and develop strategies.
But we cannot control the other party's decisions.
My Philosophy: Focus on Finding a Way Forward
I believe good negotiations begin with listening.
What matters most to you?
What concerns are most important to the buyer?
Where do we have flexibility?
Where do we need to hold firm?
And how can we find a solution that allows both parties to move forward?
Sometimes the answer is completing a repair.
Sometimes it's offering a financial concession. Sometimes it's declining a request and allowing the buyer to decide whether to proceed.
And sometimes, despite everyone's best efforts, the transaction simply doesn't work out.
My responsibility is to help you understand your contractual obligations, evaluate the available options, and make decisions that align with your priorities.
I will always do my best to anticipate potential challenges, stay in communication with the buyer's agent, and look for constructive solutions.
But I also recognize that every seller has different circumstances, different priorities, and a different threshold for compromise.
My job isn't to make the decision for you. It's to give you the information, perspective, and professional guidance you need to make the best decision for yourself.
Because at the end of the day, getting through due diligence isn't about winning every argument.
It's about making thoughtful decisions, protecting your interests, and hopefully getting one step closer to the closing table.
And that, my friends, is something worth celebrating!
Have questions about selling your home in Asheville or Western North Carolina? Whether you're preparing to list or navigating a complicated transaction, I'm always happy to talk through your options and help you develop a plan.
Next in the Seller's Guide: From Under Contract to Closing Day — What Happens Behind the Scenes?
- Selling Guide
