Due diligence refers to the time right after the acceptance of a sales contract for a residential property. During this time, the buyer determines whether the home is the right one for them. For the seller, this time is about preparing for and passing inspections and possible price negotiations.

Depending on the details in the written and executed contract, due diligence varies between one purchase and another. Due diligence typically takes between 0 to 30 days.

What Are the Different Responsibilities During Due Diligence?

For the buyer, due diligence is a great time to get to know the neighbors and familiarize yourself with the community. You can go online to check out local crime statistics and traffic in the area.

This is when you order an inspection and review the results. If significant defaults are found, you may need to negotiate for price reductions or repairs.

For the seller, due diligence includes providing access for the inspector and provided the necessary disclosures.

Go over the inspection report with your real estate agent and ask about any findings that may lead to sales concessions or further repair expenses.

What if the Buyer and Seller Are Property Management Companies?

Due diligence works the same for individuals or property management companies. However, the process is more involved if the property being sold is a commercial building, due to additional legal requirements and the nature of the property itself.

Where Is Due Diligence Defined?

The answer to this may vary from state to state. However, it’s usually written into the first page of the Purchase and Sale contract.

Due diligence is a critical time period for buyers and sellers. Buyers can ask any additional questions they have after the inspection, and sellers can decide whether to pay for any additional fixes to the property or seek another buyer.