Explaining the Due Diligence and As-Is Clauses

Here’s how due diligence and as-is clauses work in a real estate contract.

Today we are continuing our discussion on what the South Carolina state real estate contract has to say about property conditions. We went over the repair clause last time, but today we will go over the due diligence clause and the as-is clause. 

A due diligence clause will allow you a designated amount of time to have the property inspected any way you want. What makes the due diligence clause unique is that at the end of the due diligence period, you have the right to back out of the contract for any reason. You do still have the option to move forward with the purchase and you could also ask for repairs.

Though this clause offers you as Purchaser the option to back out of the contract, there is a required termination fee in order to be able to do so. This termination fee is a negotiable amount of money that you will pay if you back out of the contract after having your offer accepted.

In this market, due diligence is a less desirable option for homeowners. Sellers are more likely to accept an offer that does not have a due diligence clause, because of the option to back out.

The as-is clause is a clause that says you agree to buy the home as is. Because we are currently in a strong Seller's market, the as-is clause is becoming a more popular option because competition for homes is often so fierce. We will always recommend you have it inspected, but with the as-is clause you are agreeing not to ask for repairs and move forward with the purchase regardless of the condition. When writing an offer on a property, we will discuss which of these options is right for you.

If you have any questions for me about these clauses or anything else related to real estate, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.