First-time Home Buyers’ Guide: What Is Due Diligence?

It would be best if you did your research to ensure you do not make costly mistakes as a first-time home buyer. A lot goes into purchasing a house. It would help if you learned as much as possible in a relatively short time to make decisions that you will not regret. 

Whether you are an experienced or first-time buyer, it is a stressful yet exciting experience. Buying a new home is a huge deal. It is never wise to be hasty just because you think the agreement favors you. 

What Is Due Diligence?

In real estate, think of due diligence as doing your homework. You should know all the facts about the property before you fully commit to a proposed transaction. Due diligence is one of the most misunderstood subjects in real estate transactions for sellers and buyers alike. 

In simple terms, it is a review, audit, or investigation performed to confirm the facts of a matter under consideration. It is a critical process that home buyers cannot afford to ignore. By doing your due diligence, you will avoid purchasing a home with more problems than you first realized. 

Understanding Due Diligence 

Would you buy a vehicle without looking under the hood? Likewise, you should only purchase a house if you look beneath the surface. The process involves checking the home for physical defects and studying the legal documents to ensure there are no problems or outstanding liens that could compromise the purchase. 

It is best to perform due diligence before making an offer, but people often do it between entering and closing a contract. Do not overlook this process in the excitement of owning a home. It is entirely on the buyer to do due diligence. It allows you to back out of the deal if certain contingencies are unmet.

Due Diligence Period in Real Estate

As a home buyer, there is a period you can research the property to determine whether you are comfortable signing the dotted line. Usually, the due diligence period is anywhere from one to two weeks, depending on where you want to buy. The time frame allowed usually depends on standard real estate customs. 

It would be best if you learned as much as possible during this period. Your purpose will be to discover imperfections that may force you to reconsider your purchase decision. It is best to be as thorough as possible since there are no second chances. You may request an extension of the due diligence period if you uncover something that requires further investigation.

Things to Do During the Due Diligence Period

• Have the home inspected

• Study the seller’s disclosures

• Have the property surveyed

• Search the title and title insurance

• Analyze the HOA restrictions and covenants

• Ensure the property complies with zoning rules

• Get an insurance quote

• Perform due diligence on the neighborhood

Due diligence is a critical aspect of purchasing any asset for whatever reason. So, you should not leave any stone unturned. Working with a real estate attorney and an experienced contractor can be of invaluable help in this process. A contractor can provide advice and help you conduct your research.
 

For more home-buying tips, visit Randazzo Builders Inc. at our office in Sorrento, Florida. Call (888) 281-4983 to book an appointment today.