Understanding the Due Diligence Period in a Real Estate Sale

Let’s say you fall in love with a house at first sight. You’ve gone past crush, and this is love, which can come with all the potential pain of a human love story.

Because just like in love, a background check of sorts – at least asking someone who knows – is an important way to get to know if the date, or the house, is worth pursuing, or if you will find out something you really didn’t want to know.

That background check in home buying is due diligence, and it is the period of time immediately after the purchase offer is accepted and a sale contract to buy the house goes into play.

What is due diligence?

For a buyer, the period of due diligence gives a buyer a chance to get to better know the neighborhood and determine if they are a good fit (are the schools a match, do you enjoy the shopping, are there enough walking/biking trails, etc.).

Inspections will happen during due diligence – something buyers should be aware of – and if anything questionable is found, the seller may want to negotiate a different price to pay for whatever defect was uncovered upon deeper inspection.

There are always risk factors that accompany the purchase of big-ticket items such as homes, but due diligence can eliminate at least some of the potential surprises.

The best due diligence

There are a few tips that can make the time spent after making the offer less stressful.

  • Do due diligence prior to putting in an offer. If you like a house, do as much research as you can before putting in an offer. This not only makes surprises less likely, it also helps avoid the disappointment of finding a dream house, only to learn that mold could prevent you from buying the home.
  1. Know the market. Check to see what similar homes in the area are selling for so you’ll make a fair offer and you won’t be paying more than the market supports.
  2. Make sure that your financing is not only approved, but approved for the best price possible. You don’t want to be paying on your dream home forever. Eventually, even dream homes can become nightmares when the mortgage never seems to go away.
  3. Make sure you can afford it. If it is an investment property, be certain that the income that will be coming in from the property covers the costs; if it is your personal property, make sure too much of your income isn’t going to living expenses.
  • Go to the inspection. Knowing first-hand what needs fixing on your new property will make it easier to line up contractors and add up supplies at your local do-it-yourself store. Getting estimates before closing will let you be certain that your purchase is affordable.
  • Can you get insurance? Make sure that you don’t live in an area prone to fires, hurricanes, or other natural disasters that could prevent you from getting an affordable policy.
  • Is the HOA reasonable? Get to know someone from the homeowner’s association so that you can determine whether or not your HOA is one that will be worth the proposed expenses or not.
  • Records. Make sure that the title insurance is clear and that the land has been plotted out without any signs of potential problems. Neighbors won’t be fun anymore if a small parcel of land becomes something worth arguing about.

Contact a Florida Real Estate Fraud Attorney

A Florida real estate attorney can help you do your due diligence so that your dream home never becomes your nightmare. If you’re in the market for a new home, call Ricardo Rodriguez at Rodriguez Law at (305) 262-8226.

About Rodriguez Law, P.L.

Rodriguez Law, P.L. is dedicated to providing quality personal legal services to our clients. Our reputation for combining quality, knowledge, and technology to deliver efficiency and value makes us one of the most trusted law offices in Miami-Dade and Broward.