If you've ever started the home buying process, you’ve likely heard the term “due diligence.” This phrase is used so often during the home buying process that sometimes it’s hard to know what you should be doing to do your “due diligence.”
The term due diligence is used as a way of saying that you've done your research on your investment. When you do your due diligence on a potential home, you’ll know the state of the home’s foundation, systems and appliances, title, neighborhood, and more before you close on the home. If you don’t do your due diligence when purchasing a home, you may find you’ve made a mistake! Below are a few of the things you should be doing to do your due diligence before purchasing a property. Make sure to work with your real estate agent and ask them lots of questions so you understand exactly what you should be doing during the home buying process.
Get a Home Inspection
The first thing you should do once you and the seller have agreed on an offer price and you’ve entered into contract on a home is get a home inspection. A home inspection should be done by a licensed home inspector. Your real estate agent most likely has someone they trust to do a thorough job. This inspector will look through the home’s systems, appliances, foundation, structure, attic, and more to give you a report on the state of each of these items. It’s possible that if the inspector finds an issue with a particular item in a home, they’ll suggest getting a specialist for that part of the home to take a closer look or complete a repair. Otherwise, the results could prove disastrous.
As a part of your due diligence, you should go through the home with the inspector(s). You will receive valuable information about the home’s potential problem areas. You can ask the inspector questions while you’re in the home together rather than after the fact.
Remember, if there are problems that must be fixed, do not assume that home insurance or a home warranty plan will cover the repair or replacement. Most home insurance and home warranty plans don't cover repairs that are found during a home inspection. It is your responsibility to bring this up to your real estate agent and seller and get the problem fixed before you purchase the home. Some sellers may decrease the selling price so you can use the money you’re saving on the selling price on necessary repairs and replacements after closing.
Read Any Disclosures
Each state has different laws on what needs to be disclosed to potential buyers, and what does not. Your real estate agent will know more about the specifics of seller disclosures in your state and will help you read through them and understand what they mean. A great real estate agent can help you know what items to watch out for in a disclosure that may present problems in the future in a property.
Title Search and Title Insurance
When you purchase a home, you will go through a title company. This company does a lot to help you complete due diligence. The title company will research the home’s title to ensure there are no liens against the property and the title of the home is legally allowed to be sold. The title company also provides insurance so that if a discrepancy is discovered in the future, the buyer will not lose money on the purchase of a home that doesn’t legally belong to them. Your real estate agent or mortgage provider can help you to pick the best title company to help you complete this portion of due diligence.
Get a Property Survey
Next, get the property you’re going to purchase surveyed. A property survey company will tell you where your property lines are located. This way, you know exactly how much property you are purchasing and if you want to build something on your property later on, you can use this survey to get permits to build. Most lenders want a property survey on file to make sure you're getting a comparable value for the price you've paid. Take a look into what a property survey is here.
Purchase a Home Warranty
Next, research and find the best home warranty plan for the home to cover the major systems and appliances. Your home warranty may come with the purchase of your home (bought by the seller) or purchased by the title company during closing. Title companies and sellers don't generally have the same vested interest in purchasing the best home warranty plan for the home like you do. Complete your due diligence by finding the best home warranty plan for your future home and request that home warranty company. This may take some research, calls and comparing quotes, but in the end, knowing what's covered in your home warranty plan and knowing you chose it out of all the comparable plans is a great assurance. Take a look at our article on how to find the best home warranty plan here.
Much like a home warranty, part of your due diligence is finding the home insurance policy that fits you and your home the best.
Research the Neighborhood
Finally, before buying any home, make sure you know where you're going to be living. No, not just the home and its structure, but the neighborhood itself, including long commutes from work and noisy neighbors! It's a good idea to stop by on weekdays and weekends at different hours of the day to get a feel for how the community functions. If your home falls under a Homeowner Association, make sure you know the rules you'll have to follow.
Now that you’re through with this article, start completing your due diligence by doing some research on Landmark Home Warranty. Landmark has been awarded the best home warranty in the region by Home Warranty Reviews in 2019, 2016, 2015, and 2014 and was awarded the consumer choice award for 2019 by Best Company. Begin by comparing our home warranty plans here.