What is Due Diligence in Real Estate?
Houses don’t come with return receipts, so how do you make sure that this is the house for you, and that it has no hidden defects? Today we’re going to be talking about something known as due diligence in real estate. What is due diligence?
Due diligence in real estate is the period of time that the buyer has to do all of his or her investigating on the property to make sure that this is the house for him or her. This is the time that you are going to hire an inspector to come out and inspect the house from top to bottom. You’re going to comb through that inspector’s report, you’re going to ask the seller questions, you’re going to review the seller’s disclosures that hopefully your agent requested from the homeowner, from that listing agent
If you’re interested in finding out what the crime is like in that area, you’re going to go and investigate that, you’ll go to specific websites where you can look for that. If you want to, and feel so inclined, you can go door-knocking and talk to the neighbors, which I actually recommend my clients do. Because you can learn a lot by talking to neighbors.
Every neighborhood has one nosy neighbor, they know everything, and they have no problem telling you everything. So talk to the neighbors also during this time, and learn as much as you can.
How long is due diligence in real estate? That will be negotiated between you and the homeowner, your agent will help you negotiate that. Typically, I like to negotiate no less than 10 days.
Buyers, during the due diligence period in real estate, if anything comes up that you’re not happy about in the inspection, after you’ve talked to your neighbors, and any of the research that you have done, you can pull out and not lose any of your earnest money because you are still in the due diligence period.
Now here’s some advice to homeowners about the due diligence period in real estate. Homeowners who are selling your houses, don’t wait for the homebuyer to get an inspection. Get your own inspection before you list the house. This way, there are no surprises when the buyer comes along and he brings in his inspector.
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