Due Diligence: Factors That Can Help in the Home Buying Process
While the market may have cooled slightly, the overall temperature still has so many people selling up. Up until recently, the moment properties have gone on the market, there has generally been a major feeding frenzy. And with home values now slightly dropping as fresh properties simultaneously coming up, it’s becoming more and more of a buyer’s market. The problem is that just like with Ebay, with more competition, we can feel the temptation to jump at the first house that ticks most of the boxes. But the reality is that when it comes to buying a property, we’ve got to exercise our due diligence.
What is Due Diligence?
Due Diligence is about making sure that we evaluate everything before we purchase. There are so many components involved - and not just about the potential resale value.
How To Conduct Due Diligence
The first thing to do is to get to grips with what the property is capable of, but also, the other end of the spectrum. In other words, the things that could really hamper resale value and make it a nightmare to live in, such as issues like water damage. You can always learn about signs of water damage in the home to get a basic understanding, but it's property experts that are the people to ask, but when you are looking for a new home, there is a lot of information out there that you can easily find online. If you are wet behind the ears, you need to start digging. After all, it's a home you are paying a lot of money for.
Understanding the Marketplace
Any first-time buyer will look at a handful of properties before they put in an offer. The problem in doing this is that you don't know what else is out there because you have looked in a very small pool. When it comes to the areas you want to purchase your home, you need to not just understand the competition in the market but also need to look at the quality of the houses in the neighborhood, the demographics of the people that live there, but also if property values are changing. There are so many factors that can show you if a marketplace is the right one.
Getting the Property Inspected
In order to be truly effective in your due diligence, you have to get the property inspected. There are different types of inspections that you can pay for including defective drywall inspection, Radon inspection, lead-based paint inspection, and a general home inspection. The latter should always be performed before you purchase a house because this will provide a detailed report of the condition of the property as a whole and if any repairs are necessary. If it throws up a number of issues, this could make you think twice about if the property is worth the investment.
How Long Should You Be Diligent?
In the United States, a due diligence period is a legal part of the process, for example, in a state like California, it's around 17 days and starts within 24 hours of an offer being accepted.
However, due diligence is something that should be part of any buyer's approach as it can greatly protect you from purchasing something that will not suit your needs.
