Due Diligence is a phrase used in to generally indicate a person’s need to take time to research whether something is in the same condition as someone claims it is. In real estate, it is the name for a period of time during the buying process where the buyer makes absolutely sure that this is the house they want. They do that by investigating as much as they can. A buyer does their “due diligence” before they commit to buying.

Why it is important

Due Diligence is a name for a period of time in a real estate purchasing process that the buyer uses to make absolutely sure that this is the house they want. They do that by investigating as much as they can. A buyer does their “due diligence” before they commit to buying.

Part of understanding due diligences is also knowing what steps you as a buyer can take to find out more about what it is you are buying. There is a lot to do quickly during the due diligence  (DD) period. It’s not a time for dawdling!

First, buyers hire a professional inspector do a thorough review of the home. They also ask the seller to provide informative documents, like warranties and other paperwork. They might use the time to hire other workers to address concerns, like possibility of flooding or a roof that looks old.

During this time, they also can renegotiate the price, or decide to walk away from the deal.

So how long is the due diligence period. It varies. For a standard transaction, it’s about 5 days. The length of the due diligence period is agreed upon during contract negotiations. And since circumstances vary, DD can last up to several weeks, or even longer in special cases. There are also circumstances where the due diligence period is zero days because the buyer feels comfortable with the risk.

What research happens during this time?

• Home Inspection –  A critical step is hiring a professional inspector to check the condition of the property. The foundation, roof, plumbing, electrical systems, and more can be looked at. Many buyers even pay for air quality tests, sewer scoping, or other specialty assessments. If major issues are uncovered, the buyer may renegotiate or even walk away from the deal as long as they do it during due diligence.
• Appraisal –  The buyer’s lender typically requires an appraisal to ensure that the property is worth the agreed-upon price. If the appraisal comes in lower than the purchase price, it may affect financing or lead to renegotiation.
• Title Search – A title company will perform a search to ensure there are no outstanding liens, claims, or disputes on the property. This ensures that the buyer receives a “clear title” when the property is transferred.
• Reviewing Documentation – Buyers should review important documents such as the homeowners’ association rules, zoning restrictions, and property surveys. This helps avoid any surprises after the purchase is complete.
• Final Negotiations: – If any issues arise during the due diligence period, the buyer can negotiate with the seller for repairs, price adjustments, or closing credits. If a resolution isn’t reached, the buyer can withdraw from the deal—often without losing their earnest money.

In essence, due diligence protects the buyer by allowing time to fully assess the property and ensure it meets their expectations. It’s a vital part of the home buying process, ensuring there are no hidden surprises and giving both buyers and sellers a smooth path to closing.

Your REALTOR works hard during Due Diligence

You must choose a REALTOR that helps you navigate all the moving parts of due diligence and keeps you on track. And the amount of time set aside for due diligence in the contract can be extended if permission is granted by the seller.

A word about “As-Is” sales: When a seller says the house is being sold “As is,” that does not mean you forfeit due diligence. It actual means that whatever you uncover will most likely be your responsibility to address. Or of course, you can decide not to buy based on the information you uncovered during due diligence.

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