Due Diligence, Simplified

The Georgia Association of Realtors (GAR), led by legal counsel Seth Weissman of Weissman, Nowack, Curry & Wilco, provides the forms used in the overwhelming majority of real estate transaction in Georgia. In particular, the standard Purchase and Sale Agreement contains a ‘due diligence’ paragraph which is often misunderstood by buyers and sellers alike. In truth, it’s very simple and tends to facilitate a smooth transaction for all parties.

As with most legal documents, the GAR Purchase and Sale Agreement has evolved over time. Prior versions attempted to assign some responsibilities to the buyer (i.e. home inspection, loan acquisition, etc) while assigning others (termite clearance, septic system certification, boundary marking, etc) to the seller. This sometimes resulted in misunderstandings between the parties, with important milestones going unmet or being performed hurriedly, just prior to closing.

The story of the share cropper... another Monty-ism

What the heck does THIS have to do with Real Estate?

Well, recently our MLS has stepped up to the plate and calculates months of inventory. Months of inventory refers to this concept: Let’s say today there are 15 months of inventory. That means that if no more homes come on the market, and if sales stay at their current rate, then it will take 15 months to consume the number of homes on the market. Experts have stated that if months of inventory is 6 months or less, we are in a seller’s market. If months of inventory is 6 months or more we are in buyer’s market.

So, assume that months of inventory is showing as 9 months for this market – where you are about to get a listing. The agent, bless his heart, does everything right, is knowledgeable about the market, does all the necessary research, has a bang up marketing program, builds rapport and the seller says – OK Johnny, I would love to list my house with you but I only want to list it for 2 months...

It's the Law .... NOT!

There is no law that says you have to have your septic pumped when you purchase or someone sells.
Here's the thing.

The seller has to disclose (if they use a standard Georgia Association of Realtors contract) when/if his septic was pumped. Based on this information, the buyer decides whether or not to ask for this to be done.

The buyer has a due dilligence (although this is new for the past 2-3 years). Prior to that, the buyer had an inspection period where they could inspect for anything and everything. If a home inspector has reason to believe that there is a problem with a septic system, he might suggest that it be inspected.

Roof Repairs - don't overlook this important maintenance item

This yankee has learned something about roofs from living here in the south. This story starts when a friend of mine (who was born and raised in the south) showed one of my listings and declared that the roof had to be replaced. I said, “What are you talking about, there are no leaks, the shingles aren’t curling it’s just a little stained.” (Staining occurs on a north-facing slope with algae build-up.)

She said, “Yes, but a lot of the granules are washing off.” I said, ”So? That roof is only 12 years old. It has a lot of life left.” She said, “There’s hail damage.” I laughed, “Ha Ha Ha! Where I come from, with New York winters and ice build up, etc., roofs last for ever. Surely a little hail can’t damage a roof...”