Congratulations! You’ve finished house hunting and have finally found your dream home. Now it is time to make your offer, come to an agreement with the seller and negotiate the nitty-gritty details before closing the deal.
As exciting as this process is, you’ll want to begin digging into the process of due diligence, which is a vital part of your experience as a homeowner.
Due diligence isn’t a new term and certainly isn’t specific to real estate. Due diligence in any industry is performing the necessary tasks in order to level out details regarding any process, contracts, calculations, paperwork or protocol in business.
But, what is due diligence in real estate? What does due diligence mean in real estate processes?
We have given you some of the most important points to review and implement in order to do the best due diligence possible on your end as a homeowner. Want more information on what to look for, what information you should request and how to get started? Read on to find out!
Go over the details
Due diligence in real estate includes taking precautionary measures, performing meticulous calculations, reviewing necessary documents during a transaction, creating and prioritizing insurance, walkthroughs on site at the property before you make the purchase.
Just like doing your research before turning in a project for school, have a qualified source and hired professional go over these details with you before throwing down a downpayment for your new home.
Research the area and marketplace
It isn’t a terrible idea to look into performing due diligence when comparing home prices in certain neighborhoods that are close to the house you are considering buying.
Look at homes similar square footage and similar features in order to understand the details of your home’s price and how to negotiate if necessary.
This process can be a few weeks or a few months depending on how quickly you want to buy a home and jump into a contract.
Hash out details for financing
Landing a mortgage financing plan that is right for your price point, income and home value is not a portion of the home buying process that should be overlooked and not given due diligence.
Less than 20% of potential homeowners will only get one bid for their financing process. Proper due diligence is asking for two or more quotes or bids for your mortgage financing.
Hire a professional for a property inspection
Have you hired a highly regarded, well-reviewed home inspector to look at the property and evaluate to the highest degree? If the answer is no, you aren’t doing your due diligence and should consider an inspection.
Once the inspector has walked through the property, make sure you are reviewing remarks, comments and reviews on the report.
Immediately after review, if there is significant work that needs to be done to the property, consider getting a quote from a contractor and factor the numbers into the price you are pitching for the home.
Even if the report shows small repairs, those small repairs can add up significantly. Also, renovating is highly expensive and can be an extremely high risk.
Get proper estimates before you move forward with a property that needs work.
Look into insurance
We all know insurance is an important quote to receive, especially against a home. Due diligence in real estate and insurance pertains to asking for and receiving a quote that is specific to a property, the area and even the state the home resides within.
States and cities that are prone to environmental conditions such as fire, tornados, hurricanes, landslides or flooding may be more difficult to procure a policy, however, consider getting one or more bids to perform due diligence on your property before moving forward.
Is your potential property a part of an HOA or homeowners association? If so, you have the power to opt out of a property that upon review of HOA documents shows a community, neighborhood or property that is out of shape, prone to crime or wavering on the fence of suspicious.
Take advantage of your HOA document(s) and ask around to get the opinion of board members.
Doing your due diligence is incredibly important when it comes to reviewing documents, going over the fine details and providing necessary documents that are needed in order to move forward with buying a home.
As a potential homeowner, you want to make sure the home you are moving into is perfect for you and your family.
If you have found this information useful, let us know and continue to read through the website to find out more information that is helpful to the homebuying processes, resources needed in order to get the most for your money and live happily ever after.