Proper Use of Due Diligence Request and Agreement Form

Dear Forms Guy, We’ve got a new broker-in-charge and well, she thinks she’s God’s gift to the real estate business. She says we all have to start using the Due Diligence  Request and Agreement form pronto. I’ve been in the business since before she was born and I’ve gotten along just fine without any form. But she’s the boss, so what are  you going to do? Anyway, it looks to me like the logical way to use the thing is to write it up after the buyer and seller reach an agreement on repairs and then get them to sign it. Well, “Her Highness” informs me that we should use the form during the negotiation process. I don’t understand why. I mean, what if the seller won’t agree to everything the buyer asks for in paragraph 1? Will you please explain that to me? I’m not about to give her the satisfaction. Signed, Bitter and Oppressed

Dear B & O, I know you’ll think this answer stinks, but your BIC is right. Let me explain by making an analogy to the way that a buyer and seller might use the Offer to  Purchase and Contract form to negotiate an agreement. Buyer submits an offer. Seller counters the offer by changing the purchase price and initialing and dating the change. Seller’s counteroffer is acceptable to the buyer, so she initials and dates the change and communicates acceptance back to the seller. That creates a binding contract, right?  Parties can use the Due Diligence Request and Agreement form in the same way. The Guidelines for completing the form state the following: “If the Seller disagrees with one  or more items that the Buyer has listed, the Seller should strike such item(s) and date and initial the deletion(s) prior to signing and dating the Form and returning it to the  Buyer. If the deletion(s) made by the Seller are acceptable to the Buyer, the Buyer should also initial and date the deletion(s).”

CAVEAT (a fancy Latin term that means beware): As stated in the Guidelines (form 310G) for completing this form: “It is important for the parties to understand that unless the parties agree otherwise, the execution of this Form by the parties does NOT extinguish the Buyer’s right to terminate the Contract for any reason or no reason prior to the  expiration of the Due Diligence Period…” See the “NOTE” at the end of paragraph 1 of the Due Diligence Request and Agreement form. Sincerely, Forms Guy

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