Understanding the Due Diligence Period in a Real Estate Transaction

Due diligence in real estate is broadly defined as the time when buyers have expressed their intention to buy, but they need a few things to make sure they want to finalize the deal. In a real estate transaction, the steps a buyer takes to close a deal after an offer has been made are commonly referred to as the “due diligence” period. These items are:

  1. Research the market – What are other homes in the area selling for? This will help ensure your offer is fair for both sides.
  2. Attend the inspection – While most home inspectors will give you an honest assessment, you’ll feel more confident if you can see everything that may need to be fixed with your own eyes.
  3. Get approved financing – Obviously you’ll want to make sure you’re approved for a mortgage, but you also want to make sure that you’re getting the best price possible. No one wants to keep paying on their mortgage forever.

A property under “active due diligence” means that the house is under contract. However, the home may return to the market if the buyer drops out during the due diligence process for whatever reason.

Ending Due Diligence

Even if everything is approved, the due diligence period must not be allowed to expire by a buyer without a written notification waiving the contingencies. Failure to do so may result in the seller issuing a Notice to Perform to the Buyer up to two days before the expiry of the contingency period, giving the buyer 48 hours to sign off on the tasks or cancel the contract.

Once contingencies have been waived, the escrow proceeds assuming the buyer has been satisfied with any inspection results and assumes the property in as-is condition.

Seek Legal Help

Another great step to take during the due diligence period is to seek assistance from a competent lawyer to help you through the process of your real estate transaction. If you’re in the market for a new home, contact the Greenbaum Law Firm, P.A. to schedule a consultation today.

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Greenbaum Law Firm, P.A.

The Greenbaum Law Firm, P.A. is a boutique, client-centric law firm concentrating in the areas of business and corporate law, contracts and agreements, and real estate. Our unique approach to the practice of law consists of positioning our clients at the center of the legal practice and pursuing their objectives in the most efficient and transparent manner.

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