Eager to learn more about real estate in Johnston County? The Tina Barletta Team is here to help! Our Real Estate Basic Training 2020 is designed to clarify some of the more complex facets of buying or selling a home. Boot Camp is kicking off with Lesson 1: Due Diligence! Are you ready to learn?
What Is Due Diligence Anyway?
First and foremost, what the heck is “due diligence” anyway? In short, it’s a set amount of time, negotiated between the buyer and seller, that gives the buyer the right to investigate the property they are buying.
In other words, due diligence is a block of time in which the buyer has an opportunity to make sure there aren’t any red flags—physically, financially, or legally—about the home they’re buying.
What happens during due diligence?
This “investigation” typically includes a home inspection, as well as various other inspections depending on the type and location of the property. This might include a well or sewer inspection, radon testing, land surveying, pool inspections, and more.
Typically, there are a few other legal investigations happening behind the scenes, too, like a title search, which determines the seller’s legal ownership of the property. Most lenders will also require a home appraisal to ensure that the value of the home meets or exceeds its cost.
What happens if the buyer finds something?
Let’s say something shows up in the home inspection. The foundation’s cracked, the roof is old, there’s an electrical problem… something big. What happens next?
At this point, the buyer has three options. They can ask the seller for a price reduction or credits towards closing costs. They can request that the seller make repairs. Or they can simply walk away from the sale, no questions asked.
What options does the seller have?
Should a buyer request a repair, price reduction, or credit, the seller does have the right to refuse. At this point, the ball is back in the buyer’s court—they can walk away or continue forward with the home as-is.
Depending on the contingencies determined in the Purchase and Sale Agreement signed by the buyer and seller, the buyer may or may not be returned their earnest money should they choose to walk away from the sale.
How long is the due diligence period?
This is a flexible amount of time determined by the buyer and seller and agreed upon in the Purchase and Sale Agreement. Typically, both parties like to have this completed as soon as possible, with a home inspection often required with a few days of the signing of the Agreement. But it can vary based on individual situations, and can range anywhere from about one to 30 days.
Other elements of due diligence
Depending on the age, location, and type of property being purchased, there may be a few other areas of inspection or research. This might include homeowner’s association fees or rules and regulations. Buyers may also confirm that the property is eligible for homeowner’s insurance. They can also do research on crime rates or even regular noise and traffic.
There’s a lot that goes into investigating a property before purchasing, and it’s important for buyers to do their homework—and for sellers to disclose or fix any known issues well beforehand!
Want to Know More About Due Diligence in JoCo?
Due diligence—and real estate in general—is different from state to state, county to county, and at times, even town to town or neighborhood to neighborhood. If you’d like more information specific to your area, it’s best to ask a real estate agent.
Buying or selling in Johnston County? The Tina Barletta Team is here to answer all your questions—due diligence or otherwise! Contact us today to learn more about how we can help you find the perfect home in just the right location… or list your current home for top dollar.