When purchasing a home, there is a process leading up to closing called due diligence. This can sometimes be strenuous, but if you are working with a seller that has everything in order with the home, your transition should be fairly easy.
Due diligence refers to essentially doing your homework to make sure you’re getting what you pay for. Due diligence can be conducted before making an offer on a home, but most commonly takes place between entering into the contract and closing on the home. If any defects are discovered within the property, the buyer and seller can come to an agreement on how to resolve the issue or the buyer can back out of the contract.
A home inspection is one part of the due diligence process in which an inspector is hired to thoroughly look at every area of the home, inside and out. The inspector looks at things such as foundation issues, HVAC systems, termites, and other problems that could be costly to the buyer. The inspector will also test for biotoxins in the home such as mold.
Aside from having an inspector conduct due diligence, the buyer should also look into the home themselves. It is important to have a fresh set of eyes in case the inspector may have missed anything.
Mortgage lenders typically require a title search as part of the due diligence process as well. An example of this would be making sure a creditor has not placed a financial lien with the previous owner. It is necessary to have a home title free and clear of any defects in ownership.
Both the buyer and the seller of the home can work together to agree on a timely period within the contract for due diligence to be conducted. This is typically up to 30 days in most states. The time frame should be clearly stated in the contract so that all parties are aware.
We’ve covered the basics of the due diligence process when buying a home. For further explanation and examples, one of our trusted realtors is happy to assist!