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What is the difference between Generic or Specific DD Clause? Making an offer three due diligence clauses must be included when dealing with the seller’s agent



Buyer’s Due Diligence

Tips to use Generic or Specific DD Clauses

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Generic or Specific DD Clause—what is the difference?


Looking at the due diligence process with DD clause examples I mentioned how to use a generic clause and specific clauses.


A generic DD clause would cover everything you might think of and is a protection for having something overlooked. 


Specific DD clauses for each condition cause more paperwork. But they are preferred by seller’s agent to have more control over the sales process.



Dealing with the seller’s agent


The agent talks with many people and the majority of “interested buyers” and “open home visitors” look around but are never going to buy, don't have the money, or buy something completely different from what they talked about. That causes some type of frustration.


To get the agent’s cooperation be clear about your next step and follow through your check list. Don’t rely solely on the agent although he/she is obliged to disclosure.  However you must ask the important questions. Remember the agent’s role is selling for the vendor.




Making an offer


This article illustrates the steps for making an offer. Often willing buyers miss out by being focused on price only. The first offer is little bit guesswork like “try and error”.  Too low or silly offers can upset the vendor bringing you in a difficult position. By considering the property market (buyer’s or seller’s market) you should be able to adjust the asking price accordantly.


When the first offer was too high, the due diligence investigations will reveal that, you still have good reasons to re-negotiate your offer.   In some cases it has worked for me and in others the seller had good reasons to stand firm. At the end a good deal has two satisfied parties.


When the sales and purchase agreement becomes unconditional (accepted by all parties) be certain of your lawyer’s OKAY before signing the contract.



Three DD clauses the offer must have


Around due diligence you possibly have heard numerous stories that the buyer and his trades people were not allowed to enter the property,  or that the buyer did not receive any response on the offer, or the agent refused to take the offer to the vendor and so on.


To avoid any of those scenarios the purchase offer should have minimum three DD clauses:


A) Sunset clause (expiry clause)

E.g. This agreement is rendered null and void if not signed by the vendor and faxed or delivered to the purchasers solicitor before (time) AM/PM on (date)


The sunset clause limits timeframe for negotiating the deal by the vendor to avoid limbo situations. Without expiry clause the vendor could hold you ransom for months, or you don’t need to cancel when the vendor is unresponsive.



B) Generic DD Clause or specific clauses for buyer’s investigations


The generic DD clause for the benefit of the purchaser covers everything the buyer may touch during the DD process.

Some agents are opposed to generic DD clauses as they experienced that the buyer walked away from the offer. In this case I would launch the offer with a difficult agent. It is your offer and agents compete against each other.



C) Access Clause

E.g. This agreement is conditional upon access being given to the purchaser between ... (dates) for the purpose of tradesman quoting for repairs to the property. 


If you cannot have access with your trades people to investigate the building, you will not be satisfied with the building.


The next part shares considerations on special  conditions to save you money. That can be tree pruning, rubbish removal, warranty issues — and so on.




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