Due Diligence? What does that mean?
Today we are going to tackle a topic in real estate that many home buyers AND home sellers struggle to understand: Due Diligence.
On the Colorado contract to buy and sell real estate, you will find a section specifically dedicated to Due Diligence during the transaction.
If you are a home buyer, this period is really your opportunity and time frame to really DO YOUR RESEARCH and make sure this is the perfect home for you.
The home seller will assist in this process by providing documentation regarding the home that will help the buyer to understand the history of the home over time and over years.
Let's take a peek a few examples.
EXAMPLE #1: The seller may have recently done some repairs on the home. Perhaps they replaced the roof or the water heater. Maybe they purchased a new washer and dryer and have a warranty on those items. For these examples, the seller would want to provide invoices, receipts, appliance manuals, and/or the warranty information specific to the item being addressed.
EXAMPLE #2: If the home is in an area that has covenants or a home owners association, those documents are considered due diligence items and will need to be provided to the buyer as well so that they can understand what the rules are for living in this particular neighborhood.
EXAMPLE #3: To piggy back off example #2, should the buyer have a business that they would like to run our of their home, they will also need to do their own research and make sure that the HOA as well as the city or town will actually allow them to do so. It is important for the buyers to ensure they have done ALL the research, even outside of what the seller will provide, as this could have a big impact on a home based business. The responsibility does not lie solely on the shoulders of the seller.
Now, should there be any issues that arise with these documents, such as a lien put on the property due to a lawsuit, unpaid construction, or unpaid HOA dues, the buyer will also want to object to seller and find a solution which will ensure that the problem will be remedied prior to closing.
There are countless more examples of how due diligence documents could need to be provided, so please make sure to reach out and discuss with us, your trusty real estate agents, what your specific situation deems necessary. Our goal is always to help you grab the good life and ease the stress of confusion during this time of transition.
Julia Bandel Shawn Bandel