In today’s episode of the Stephen Cooley Real Estate Show, Stephen and Brian McCarron talk about whether you should use contingency 8 or do due diligence. Brian is an absolute expert on these contracts. If you’re interested in selling your home or buying a house, he will explain which option is suitable for you.
There is a difference between North Carolina and South Carolina real estate:
- in North Carolina everyone does the due diligence
- in South Carolina it’s an option, but it’s not a requirement and if you don’t do due diligence then you rely on a contingency 8 in the contract
For more details watch this video:
STEPHEN: Hello, I’m Stephen Cooley and welcome to the Stephen Cooley Real Estate Show. I’m very excited to have Brian McCarron back on the show.
BRIAN: Thank you Stephen.
STEPHEN: As most of you know Brian’s one of the agents here with the Stephen Cooley Real Estate Group specializing in working with buyers and sellers in the North Carolina and South Carolina market. Brian thanks for bringing your expertise on today’s show.
One thing I wanted to talk about, because there is a difference between North Carolina and South Carolina real estate, is dictated by the state laws not the federal laws. Brian, in North Carolina, as you know, everyone does the due diligence. In South Carolina it’s an option but it’s not a requirement and if you don’t do due diligence you rely on a contingency 8 in the contract, so I thought it’d be great for buyers and sellers because it affects both of them. Let’s really quickly explain what due diligence is for them to understand.
BRIAN: That’s right, so due diligence basically you can do all of your inspections, you can inspect the house in any way you need to and you can actually get out of the contract for any reason; you don’t like the color of the walls whatever it is by paying your due diligence fee.
STEPHEN: And so you give money to the seller and then if you don’t buy the home, the seller keeps that money and you pick a number of days where you have to do due diligence and at the end of it you tell the seller ‘I’m either buying your home or I’m not buying your home’ and the seller can release you for no reason. I mean you just lose the due diligence
money. Always in North Carolina, in South Carolina there’s an option and due diligence is one of those. The other is to use the standard contract which has contingency 8 in it: 8A and B so explain to folks what contingency 8 does different than due diligence.
BRIAN: Basically you can do your inspections the same as you do in due diligence however the seller only has to pay for certain repairs being HVAC, electrical wastewater disposal, water disposal and roof leaks. Now roof leaks is very specific, they’re not going to replace a roof because you’ve got some missing shingles but if it’s leaking they’ve got to repair it, anything else they don’t have to do.
STEPHEN: That’s absolutely right and so with the contingency 8 the buyer can’t walk unless the seller does not make repairs or if they get loan denial and things like that there’s not
an easy out to the contract unless it’s due to inspections or loan denial or appraisal problems. The due diligence allows you to walk for any reason but it costs you money to walk. If I’m a seller If I’m a buyer trying to appeal to a seller, because there’re multiple buyers interested in the property, which one would I’ve paid.
BRIAN: You’d go with a paragraph 8 because you’re saying if there’s major issues I’m going to fix them, anything else you’re in this contract you’re buying this home.
STEPHEN: Absolutely, so when you use contingency 8 as a buyer you’re saying ‘I’m buying your home as long as it inspects well and appraises and I get my loan’. Due diligence you’re
saying ‘I may buy your home, I’m gonna check some things out whether I like the schools, whether I like the neighborhood, if another home comes available that I want more I can buy it’ and during that due diligence time you can want for any reason so that’s gonna be less appealing to a seller and in this seller’s market sometimes buyers are competing with other buyers to get the home and so if you’re competing with another buyer, due diligence it’s gonna probably hurt, not help but due diligence allows the buyer to walk.
BRIAN: I’d agree, it depends really on what side of the fence you’re on if you’re representing the seller, the paragraph 8 it’s definitely more appealing, you have more of a likelihood of the sale going through.
STEPHEN: So the good news is to be informed, to me educated on what the South Carolina laws are for real estate contracts. Brian is an absolute expert on these contracts. He can explain to you whether you should use contingency 8 or if you should do due diligence and that really depends on the property and if it’s a very popular property and there’s multiple offers on it so only Brian will know that when you work with him and so you can understand both of those and when you go out and find a home that you’re iffy on buying you may want to go due diligence but if it’s a home you’re committed to and you love as long as it will inspect okay then you want to go with contingency 8. So again, that can be specific to the
property and to that owner of the property which is the seller and again Brian is the absolute expert on that.
Brian if people want to buy real estate, sell real estate in North Carolina and South Carolina can you tell them how to get ahold of Brian.
BRIAN: Sure, you can call me at 704-677-9191 or you can email me at firstname.lastname@example.org and I have my personal website at brian.stephencooley.com.
STEPHEN: Great information, it’s very key to understanding what you’re signing because these are 8 to 12 page contracts and they’re legally binding and so you want a real estate agent who will go over those with you and make sure you understand what you’re signing and again Brian’s an expert on that. Thanks for bringing your expert knowledge to the Real Estate Show today and giving our viewers some information on South Carolina contracts. We’ve got beautiful homes for sale, give Brian a call if you’d like to sell or buy a home.
Thank you again Brian.
We’ve got beautiful homes for sale in your area, please stay tuned and we’ll be right back. I hope you’ve enjoyed watching the Stephen Cooley Real Estate Show. If you’re interested in advertising your business on the program please give us a call at 803-326-2777. Join us next week for more discussions on real estate topics and help in finding your perfect home.
Thanks for watching.