Due Diligence. Sounds like a fancy term for someone doing the right thing doesn’t it? You’re not far off! If you’re wondering what this term means when navigating your home buying adventure let us explain.
Due Diligence, in layman’s terms, is a buffer within a specific timeframe most often after an offer is accepted and the contract begins and your closing date (the due diligence period) where if any issues or problems arise with the property you can walk away from your contract while getting your full earnest money back. It is important to note that the terms of a due diligence period are negotiated by your realtor on your behalf- the time frame and contingencies are up to you and your representation.
When would you ask for a due diligence?
In most cases if a buyer has any concern over something they see on a property a due diligence would be added to the contract to assure that after inspection even if the seller agrees to fix the issue the buyer still has the choice to end the contract without loosing any earnest money. Common reasons buyers ask for this period include mold suspicion, water damage, HVAC or roofing concerns or termite damage concerns. Due diligence terms also differs state to state and often does not include new construction terms.
It is important to know and understand the exact terms of your due diligence period so that you can take the correct steps to follow the terms outlined by you and your real estate agent within the time framed specified. Due diligence is a great way to protect your original investment when followed correctly. It is important to note that during a peak seller’s market, like what we are seeing in Charleston, an offer with a due diligence is less appealing to a seller than one without, but this is not a reason to overlook any hesitations or not inspect a property you have questions about.
It is always important to advocate for yourself and trust your representation whether you’re on the home buying or home selling side. Education is a key part of our process with buyers and sellers at Front Porch Properties.
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