STEP 6 - DUE DILIGENCE - Pt. 1
Congratulations on Taking Action!
You've made the brilliant decision to hire a real estate agent to help you buy a house. That’s a huge step toward ditching the high rent and finally settling into your dream home. BUT WAIT... before you pop the champagne and start imagining backyard BBQs, there’s some serious homework to do. You don’t want to move in only to find out three months later that your “perfect” home has a roof that leaks like a sieve or that the basement doubles as a swimming pool after it rains.
Now comes the part that might seem a little less fun but is absolutely crucial: DUE DILIGENCE. Yep, this is where you double-check everything, making sure there are no unpleasant surprises waiting for you down the road. Your real estate agent will help guide you through the process, but it’s your job to stay focused. After all, you want your dream home to be just that... a dream, not a nightmare with a side of buyer’s remorse!
STEP 6 - DUE DILIGENCE - Pt. 1
Congratulations on Taking Action!
You've made the brilliant decision to hire a real estate agent to help you buy a house. That’s a huge step toward ditching the high rent and finally settling into your dream home. BUT WAIT... before you pop the champagne and start imagining backyard BBQs, there’s some serious homework to do. You don’t want to move in only to find out three months later that your “perfect” home has a roof that leaks like a sieve or that the basement doubles as a swimming pool after it rains.
Now comes the part that might seem a little less fun but is absolutely crucial: DUE DILIGENCE. Yep, this is where you double-check everything, making sure there are no unpleasant surprises waiting for you down the road. Your real estate agent will help guide you through the process, but it’s your job to stay focused. After all, you want your dream home to be just that... a dream, not a nightmare with a side of buyer’s remorse!
DUE DILIGENCE CHECKLIST
The Due Diligence Checklist:
1. Home Inspections
- General Home Inspection: Think of this as your house’s physical checkup. The inspector will poke around to make sure everything’s in working order, from the roof to the foundation. Don’t worry, it’s painless (for the house, at least)!
- Wood-Destroying Termite Inspection: Nobody likes uninvited guests, especially when they’re termites munching on your walls like it’s an all-you-can-eat buffet. Get this inspection to keep the critters out.
- Lead-Based Paint Inspection: If your home was built before 1978, it’s best to make sure you aren’t buying a lead-laden masterpiece. Paint’s supposed to look good, not be poisonous!
- Radon Gas Inspection: Radon is invisible, silent, and dangerous—basically the worst houseguest ever. Thankfully, a simple test can make sure your home isn’t hosting this sneaky gas.
2. Read the Seller’s Disclosures
- Seller’s Disclosures: This is like the house’s autobiography, revealing any secrets the seller might know about. You might find out the roof was repaired or that the basement floods every time it drizzles.
- State Laws Vary: Some states make sellers spill all the tea, while others let them keep a few secrets. Either way, read these disclosures like your future happiness depends on it—because it might!
- Useful Information: These forms could tell you about previous repairs, weird quirks, or things that need fixing ASAP. If the house is hiding a skeleton in the closet (not literally, hopefully), this is where you’ll find it.
3. Financing the House
- Request at least three references: If they can’t provide them, you might wonder if their last client disappeared under mysterious circumstances!
- Ask about communication: Did the agent respond like a ninja or were they slower than molasses in winter?
- Learn about negotiation skills: Can they haggle like a pro, or are they more of a "Sure, I’ll take full price, no problem!" type?
- Inquire about the overall experience: Was the process smooth and pleasant, or did it feel like a reality show where everything goes wrong?
- Ask if they’d work with the agent again: If their answer sounds like, “I’d rather wrestle a bear,” you know what to do.
- Look for consistency: If everyone says, “Best agent ever!” you’re onto a winner. If they all say, “It was... interesting,” proceed with caution.
4. Insurance
- Homeowner’s Insurance: This is your safety net in case something goes wrong, like a tree falling on your roof or an unexpected visit from Mother Nature.
- Flood Insurance: If your home is in a flood zone (or just close to a leaky river), you might need extra protection. Because nobody wants to go swimming in their living room.
5. Property Survey
- Survey: This map shows you exactly where your property starts and ends. Want to make sure your neighbor’s shed isn’t on your land? Or avoid building your fence on their side of the property line? The survey’s got you covered.
6. Owner’s Title Insurance
- Title Insurance: This protects you from any sneaky legal problems with the property, like unpaid taxes or surprise heirs showing up to claim your house. If there’s trouble, title insurance is your shield.
- Clear Title: You want to make sure the title is free and clear of any claims. You don’t want to buy a house only to find out it came with a mystery lien from 1995.
7. Check the HOA Covenants and Restrictions
- HOA Rules: If you’re moving into a neighborhood with an HOA, make sure you read the rules. You don’t want to be the person getting fined for planting the wrong kind of flowers or painting your house neon green (even if you think it’s a great idea).
The Bottom Line...
All these steps might seem like a lot, but trust me, they’re worth it to avoid any nasty surprises later. Luckily, your real estate agent knows all the right people to help with inspections, appraisals, and title checks.
You’ll be updated every step of the way, so by the time you sign those closing documents, you’ll know that your house is in great shape, free of liens, and ready to welcome you home and give you peace of mind... priceless!
The Due Diligence Checklist:
1. Home Inspections
- General Home Inspection: Think of this as your house’s physical checkup. The inspector will poke around to make sure everything’s in working order, from the roof to the foundation. Don’t worry, it’s painless (for the house, at least)!
- Wood-Destroying Termite Inspection: Nobody likes uninvited guests, especially when they’re termites munching on your walls like it’s an all-you-can-eat buffet. Get this inspection to keep the critters out.
- Lead-Based Paint Inspection: If your home was built before 1978, it’s best to make sure you aren’t buying a lead-laden masterpiece. Paint’s supposed to look good, not be poisonous!
- Radon Gas Inspection: Radon is invisible, silent, and dangerous—basically the worst houseguest ever. Thankfully, a simple test can make sure your home isn’t hosting this sneaky gas.
2. Read the Seller’s Disclosures
- Seller’s Disclosures: This is like the house’s autobiography, revealing any secrets the seller might know about. You might find out the roof was repaired or that the basement floods every time it drizzles.
- State Laws Vary: Some states make sellers spill all the tea, while others let them keep a few secrets. Either way, read these disclosures like your future happiness depends on it—because it might!
- Useful Information: These forms could tell you about previous repairs, weird quirks, or things that need fixing ASAP. If the house is hiding a skeleton in the closet (not literally, hopefully), this is where you’ll find it.
3. Financing the House
- Request at least three references: If they can’t provide them, you might wonder if their last client disappeared under mysterious circumstances!
- Ask about communication: Did the agent respond like a ninja or were they slower than molasses in winter?
- Learn about negotiation skills: Can they haggle like a pro, or are they more of a "Sure, I’ll take full price, no problem!" type?
- Inquire about the overall experience: Was the process smooth and pleasant, or did it feel like a reality show where everything goes wrong?
- Ask if they’d work with the agent again: If their answer sounds like, “I’d rather wrestle a bear,” you know what to do.
- Look for consistency: If everyone says, “Best agent ever!” you’re onto a winner. If they all say, “It was... interesting,” proceed with caution.
4. Insurance
- Homeowner’s Insurance: This is your safety net in case something goes wrong, like a tree falling on your roof or an unexpected visit from Mother Nature.
- Flood Insurance: If your home is in a flood zone (or just close to a leaky river), you might need extra protection. Because nobody wants to go swimming in their living room.
5. Property Survey
- Survey: This map shows you exactly where your property starts and ends. Want to make sure your neighbor’s shed isn’t on your land? Or avoid building your fence on their side of the property line? The survey’s got you covered.
6. Owner’s Title Insurance
- Title Insurance: This protects you from any sneaky legal problems with the property, like unpaid taxes or surprise heirs showing up to claim your house. If there’s trouble, title insurance is your shield.
- Clear Title: You want to make sure the title is free and clear of any claims. You don’t want to buy a house only to find out it came with a mystery lien from 1995.
7. Check the HOA Covenants and Restrictions
- HOA Rules: If you’re moving into a neighborhood with an HOA, make sure you read the rules. You don’t want to be the person getting fined for planting the wrong kind of flowers or painting your house neon green (even if you think it’s a great idea).
The Bottom Line...
All these steps might seem like a lot, but trust me, they’re worth it to avoid any nasty surprises later. Luckily, your real estate agent knows all the right people to help with inspections, appraisals, and title checks.
You’ll be updated every step of the way, so by the time you sign those closing documents, you’ll know that your house is in great shape, free of liens, and ready to welcome you home and give you peace of mind... priceless!
WHAT DO YOU DO NOW?
Now’s the time to TAKE ACTION! Go through each step of the due diligence process to make sure your new home is really THE ONE. Trust me, you don’t want to skip these steps and end up mad at your real estate agent later when it’s really yourself you should be angry with. Follow the advice your agent gives you, dot all the i’s and cross all the t’s, and you’ll be living in your dream home... happily ever after, with no buyer’s remorse in sight!
So you and your real estate agent are working hard to complete all of the steps during the due diligence period. Keep in mind that every house is different. Every situation is different. Some houses are located in subdivisions that have deed restrictions and some houses might be located in a wetland area. Some houses are built before 1978 (lead based paint issue). No matter the situation... just get it done.
NOTE: This is the first part of the due diligence period. There is a part 2.
Now’s the time to TAKE ACTION! Go through each step of the due diligence process to make sure your new home is really THE ONE. Trust me, you don’t want to skip these steps and end up mad at your real estate agent later when it’s really yourself you should be angry with. Follow the advice your agent gives you, dot all the i’s and cross all the t’s, and you’ll be living in your dream home... happily ever after, with no buyer’s remorse in sight!
So you and your real estate agent are working hard to complete all of the steps during the due diligence period. Keep in mind that every house is different. Every situation is different. Some houses are located in subdivisions that have deed restrictions and some houses might be located in a wetland area. Some houses are built before 1978 (lead based paint issue). No matter the situation... just get it done.
NOTE: This is the first part of the due diligence period. There is a part 2.
SO WHAT'S NEXT?
Great job so far, and now it is time to proceed to the next step. The next step is all about what the lender needs from you to get the loan done and closed. I call this step Due Diligence Part 2. So, click the link below to go to the next step.
Great job so far, and now it is time to proceed to the next step. The next step is all about what the lender needs from you to get the loan done and closed. I call this step Due Diligence Part 2. So, click the link below to go to the next step.
