Whether buying or selling, a real estate transaction can be a frustrating, intimidating experience. At the same time, all the parties are excited with the prospect of completing the process and moving into their new futures. This excitement can be overwhelming and many times either buyers or sellers seek to skip steps and move quickly to the deal’s conclusion. Fortunately, the due diligence process exists to slow the transaction and allow the various parties to complete necessary research and investigation.
What is due diligence in the real estate transaction process?
After the parties sign all the necessary contracts, there is a due diligence period built into the process. It can be a complex process punctuated by frantic activity on both sides of the transaction. While every situation is unique, there are certain common elements to the process, including:
- Home inspections: During due diligence, the buyer will generally schedule a home inspection to uncover any issues of note. These factors could spur negotiations regarding repairs the homeowner must complete or changes to the property’s selling price.
- Mortgage company appraisal: To ensure the value of the property matches the loan amount, the bank will complete an appraisal during the due diligence period. Many liken this to an inspection performed through the lens of a financial institution.
- Title and survey: In most situations, the title provides the key to the history of any property. From the history of ownership to any liens or easements that exist, researching the title will uncover any issues that must be resolved before the closing date. Additionally, many buyers elect to complete a thorough survey to ensure the lot size, boundary lines and access road are all accurately recorded.
With the guidance of a realtor and trusted legal professional, the due diligence process and the real estate closing will move swiftly and efficiently.