Agent does not like the Due Diligence clause

This is exactly what I do and I have done it on most/every contract I have signed, all in QLD.

Sometimes, the REA or the seller has a little grumble but I just state if you don't like it, that's fine and tell the REA/seller I'm off to put an offer in on a property around the corner/down the road.

Never had it taken out .

 

I have used it in a buyer's market and a seller's market - never had to remove it.

But I'm not a good dNcer, just ask the wife !!!

 

I've only ever seen it in NSW on large development lots. It makes sense on them. Review geotech, bushfire, existing consent, contributions etc all takes time.

On a standard investment property wouldn't consider it.

 

Depending on the property and the interest.
I have seen many many times that vendors would choose the cleaner offers, ie a cash unconditional offer will be favoured over one that is slightly higher in price but has a lot of conditions and restrictions on it.

If interest is low and it's a difficult to move property, then they are more likely to consider an offer that is dependent on all sorts of things.

Timing is also important too, you can't tie up a property for a month waiting for someone to run the correct numbers in the correct sequence and ask the correct gods if this property is right for them or not.

 

People here are talking about DD as though it is a bargaining tool. It isnt. If DD is something you can be swayed from using by the vendor, then your DD is meaningless in the first place.

Your personal DD should be in place irrespective of market conditions - it determines the suitability of the property for your purposes. Why would you compromise that?

 

I agree but if you want the property you need your offer to be the best (which doesn't have to be price related). If you take out the DD clause then you have to do all your DD before you sign where as having the DD means you can do some initial work and firm up during this period.

Each to their own.

 

Each to their own I guess. I wouldn't even consider signing a contract before I had all my ducks in a row so to speak. I have always completed my due diligence prior to offers and contracts. The value I place on the property and my price range is always formed after all my due diligence is complete.

 

Good point, and valid in a fast market like Syd/Melb perhaps. In other areas theres less desperation, so I would not incurr DD costs unless I had secured a contract first, to give me first dibs should my searches prove clear.

 

It would need tobe a great offer for me to accept one with this get out of jail free card.

 

If I was the vendor I would accept on the condition I had my own get out of jail free card with a clause that said I may continue to market the property during the duration of the dd clause and if a higher offer is received I can be released from the contract.

 

Regarding @Nemo30 and @wylie posts above.

In NZ where a would-be purchaser has come along and insisted on various clauses (whatever they might be) subject to X days to confirm, it is quite common that the vendor will also insist on what is called a "cash clause" (which has a much shorter confirmation date).

Eg. Buyer A signs contract which includes 10 working days to confirm finance, etc. As a counter measure, the Vendor insists on a 3 day cash clause.

Buyer B comes along on the 5th working day with a cash (unconditional) offer, which is also accepted by the vendor. This triggers the cash clause.

With the 3 day cash clause triggered, Buyer A now has 3 days (so now only 8 days in total, not the 10 they started with) to confirm their conditions and go unconditional - else they lose the property.

I used a DD clause the last time I bought. The REA didn't like it, but since I was the only person expressing real interest in the property (something I politely but unambiguously pointed out to them) I said that I was sure their vendor would be happy with it.

 

lol thats hardly a contract with no binding at all. Only a fool would sign up to these ridiculous sunset clauses, but i note it is common.

 

I agree its a pointless contract. But what's good for one..

 

Have used DD clauses on obvious development deals . Never used it for a simple IP buy.

There is a cross over though. Sometimes investment propeties could be bought as a straight IP or also have the potential to develop. I also put DD clauses on those too.

For simple IP, finance and building and pest clauses are enough to allow multiple exits.