What is Due Diligence When Buying a Home and Why is it Important?

By
Real Estate Agent with Solutions Real Estate CA DRE #01490977

Due Diligence When Buying a Home - It's Important!

 

what is due diligenceWhen buying a home in Carlsbad CA, or anywhere for that matter, it’s critical to do your due diligence as the buyer during the contract period, which will vary not only by state but by what might be negotiated between you and the seller. You will want to check with your Realtor about your specific rights and obligations.

 

Thorough due diligence is essential to ensure you know as much as possible about the property you are buying so you can make an informed decision about whether to proceed with the purchase within the defined time frame in the contract, or not.

 

And keep in mind there are certain contingencies in the contract that must be removed by a particular time (e.g., home inspection) and which depend on your due diligence and investigation. You can read more about how to remove contingencies here!

 

Here in California the Residential Purchase Agreement (RPA) sets forth the time period, often also referred to as the contingency period, during which a buyer has some pretty specific and important tasks to carry out. These tasks include, but are not limited to, the following:

 

Home Inspection (read how to prepare for your home inspection)

Termite Inspection and Section 1 clearance

Other Inspections (there are a number of other inspections that may be recommended by your inspector OR that you feel are important)

Seller Disclosures (e.g., Transfer Disclosure Statement or TDS in California)

The Natural Hazards Disclosure Report (a.k.a. NHD)

Review of all HOA Documents

Review of the Preliminary Title Report

Insurability of the property

 

Is there more? You bet.

 

Buyer HandbookMost buyers have a long list of questions about things when buying a new homes, especially if it’s in an area they are not familiar with.  These might include the following:

 

Neighborhood and what the neighbors are like

Schools and preschools

Crime and safety in the area

What’s happening with that large vacant lot across the street?

What’s local traffic like?

Is the home in a noisy area (e.g., traffic, train, major roads, airport)

 

Here are some other things:

 

Where the official property line is and who is responsible for the existing fence?

What’s it like living in the community if there is an HOA?

Where are shopping, dining, and other services and amenities?

Other lifestyle issues (recreation, commuting routes, medical)

Is there a dog park nearby?

 

No doubt you will have some other things you will wonder about. The important thing to keep in mind is that whatever concerns or questions you have should be thoroughly investigated during your due diligence. It’s a lot of work in a relatively short period of time, but well worth it so you won’t regret your decision. After you close on the home, it's too late.

 

close

Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Todd & Devona Garrigus 10/10/2016 05:56 PM
  2. Patricia Kennedy 12/02/2016 10:37 PM
Topic:
Home Buying
Location:
California San Diego County Carlsbad
Groups:
CALIFORNIA REAL ESTATE
Local Expert
Buyer Information - What Buyers Need to Know in Today's Market
Advice for Buyers
Tags:
how to buy a house
how to buy a home
due diligence
home buying tips and advice
jeff dowler crs
southern california relocation dude
what is due dlilgence

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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Thanks Laura Sellers 

It is such an important part of the process, and it can feel overwhelming to buyers, especially when going through a purchase for the first time.

Jeff

Oct 10, 2016 09:36 AM #6
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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Totally agree Sharon Tara . We can't do their job but we can help them understand what needs to get done, consider other things they might want to investigate, and provide resources. Just getting through our seller disclosures can be a challenge, but there is so muc more to do.

Jeff

 

Oct 10, 2016 09:38 AM #7
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Hannah Williams
Re/Max Eastern inc. - Philadelphia, PA
Expertise NE Philadelphia & Bucks 215-953-8818

Jeff Dowler  doing your due diligence is so important prior to settlement

Oct 10, 2016 10:00 AM #8
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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
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Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents 

Yep I have had a few buyers ask if they really needed to do these things, or how important are they. I suspects some just do not understand the value and importance. And it's their decision about what to do, or not, but of course there can be ramifications.

Jeff

Oct 10, 2016 10:16 AM #9
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Noah Seidenberg
Coldwell Banker - Evanston, IL
Chicagoland and Suburbs (800) 858-7917

Hi Jeff, this is excellent information, especially for first time home buyers. You laid it all out in easy to understand language.

Oct 10, 2016 11:24 AM #10
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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
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Hi Hannah Williams  - it's critical, and some buyers are really not clued into what they should be doing! That's where we can provide guidance!

Jeff

Oct 10, 2016 01:23 PM #11
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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Thank you Noah Seidenberg 

I find that lots of buyers are somewhat surprised at all the issues that can come up, and how much time doing a thorough investigation can take.

Jeff

Oct 10, 2016 01:24 PM #12
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Debbie Reynolds
Platinum Properties - Clarksville, TN
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This is a very important step in the buying process and buyers need to take it seriously and not let the time run out.

Oct 10, 2016 02:18 PM #13
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Todd & Devona Garrigus
Garrigus Real Estate - Beaumont, CA
Broker / REALTORS®

Jeff Dowler great post for buyers trying to understand what due diligence is. Reblogging because of your awesomeness!

-Todd J Garrigus 

Oct 10, 2016 05:52 PM #14
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Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hi Jeff - another well-written and concise post about the importance of due diligence.   Buying real estate involves a lot of interconnected steps.  Through these steps, a buyer has the knowledge to better understand the property and the process.   

Oct 10, 2016 11:51 PM #15
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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
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Hi Debbie Reynolds 

Indeed. 2-3 weeks, if that's what the contract allows, is not alot of time, and scheduling inspections takes time. Buyers with lots of concerns or questions have a big job to do so they are satisfied.

Jeff

Oct 11, 2016 12:50 AM #16
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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Thanks, Todd & Devona / Garrigus Real Estate Group  - what a nice compliment! Just our California disclosures alone can be pretty daunting to a buyer.

Thank you Michael Jacobs  - there are many steps indeed, and some transactions can get pretty complicated with investigations and disclosures. Not doing a thorough job is risky for the buyer.

Jeff

Oct 11, 2016 12:52 AM #17
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Grant Schneider
Performance Development Strategies - Armonk, NY
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Good Morning Jeff - that is a good comprehensive list and the message for everyone is check with realtor for local laws.

Oct 11, 2016 02:15 AM #18
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Anna Banana Kruchten CRB, CRS 602-380-4886
Phoenix Property Shoppe - Phoenix, AZ
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Jeff this is a very thorough guide to understanding the importance of due diligence when buying  a home - anywhere!

Oct 11, 2016 02:54 AM #19
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
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Jeff most sales contracts I see contain a "Due Diligence" clause so it is important for both Buyers and Sellers to understand what it means.

Oct 11, 2016 06:41 AM #20
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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
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Hi Grant Schneider 

There is a lot for buyers to know, and investigate. Many are not aware up front what has to happen during this due diligence period. Some buyers are very thorough, while others are not. I proved whatever guidance I can so buyers can do what they need to do, and check on things that are of concern to them.

Jeff

Oct 11, 2016 10:38 AM #21
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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
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Thanks for the kind words, Anna Banana Kruchten . I know you are well aware of how important this process is.

George Souto  - so very true. After the fact is too late.

Jeff

Oct 11, 2016 10:39 AM #22
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Wanda Kubat-Nerdin - Wanda Can!
Prado Real Estate South - St. George, UT
So Utah Residential, Referral & Relocation REALTOR

Great information that all buyers can use prior to getting to the closing table Jeff! I call Due Diligence 'Home Work' and go through step-by-step what is expected on their part.

Oct 13, 2016 12:23 PM #23
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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
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Hi Wanda Kubat-Nerdin 

Home Work is a good way to think about it, and there's a lot. Some of it is handed to them, but some of it requires them to think about concerns and questions they have and need to get answers to or investigate. It's a weighty job!

Jeff

Oct 13, 2016 01:21 PM #24
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Sheri Sperry - MCNE®
Coldwell Banker Residential Brokerage - Sedona, AZ
(928) 274-7355 ~ YOUR Solutions REALTOR®

HI Jeff Dowler - In AZ we call it the inspection period.  But I do remember well calling it the contingency period in CA.  I always look at every home that I take a buyer into as if I was buying it for myself.  If I see something that needs to be checked I let my buyer know. Great post to inform buyers (and sellers) of the due diligence needed when buying.

Dec 03, 2016 06:18 AM #25
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