What Homebuyers Need To Know About Real Estate Due Diligence You may encounter terms and phrases you're unfamiliar with when buying a home for the first time. Once you make an offer and sign a contract with a seller, "due diligence" is a term you'll encounter. Real estate due diligence is something every buyer must know, so here's a guide to what you can expect.
What Is Due Diligence? "Due diligence" refers to how long a home buyer must conduct his or her research while the buyer's offer is being considered by a seller and ends before closing. Due diligence periods are typically negotiated but can be extended if the buyer and seller agree. In the case of trust deed investing and note investing, the due diligence period allows the buyer to identify any problems or issues with the home that could undermine the purchase and gives the buyer the option to back out of the deal if certain contingencies are not met. What Are Homebuyers Responsible For? A homebuyer is supposed to do several things during the due diligence period. The first step is to have their property appraised for its fair market value. The appraisal is what lenders use to determine if the borrower's amount of money is appropriate.