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What is the Due Diligence Period in Real Estate?

Do you have a good understanding of what Due Diligence is in Real Estate? Are you a First-Time Home Buyer not aware of this process? Read this post that will help answer common questions to Due Diligence in Real Estate.

What is the Due Diligence Period in Real Estate?

What is the Due Diligence period in Real Estate?


In Real Estate, Due Diligence is the period immediately after the acceptance of a Purchase and Sale Contract to buy a home. This time period is very crucial in determining if the home is the right fit for the buyer. For the seller, this time period means inspections and possible further purchase negotiations.

How long is Due Diligence?


Depending on how the contract is written and executed, due diligence time periods vary from home purchase to home purchase. Due diligence can be as little as ” 0 ” days and as long as ” 30 ” days, depending on circumstances.

What do I do during Due Diligence?


As the Buyer, during Due Diligence you will be familiarizing yourself with the neighbors, neighborhood and community, researching online crime reports and/or local police departments. This is also the time where inspections are ordered and reviewed. It is important for you to review the inspections report with your Real Estate Professional to ensure all is in order or to possibly further negotiate for repairs and/or price reductions.

As the Seller, during Due Diligence you will be responsible for giving access to inspections and also cooperating with disclosures as requested. Keep in mind that when the inspections are completed, your Real Estate Professional will be going over the report with you. Be ready for possible further negotiations for repairs and/or price reductions.

When does Due Diligence Start and End?


Depending on your state, Due Diligence can either begin at midnight the day of contract acceptance or immediately at contract acceptance. Please consult your Real Estate Professional for time clarification in your area.

Due Diligence usually ends either at the end of business day of the last day of the time period or at 1159pm on the last day of the time period, depending on your state.

For specific start and end dates, always review your Purchase and Sale Contract when in doubt. Your Real Estate Professional will also manage these times diligently to avoid any default of contract.

Where do I find Due Diligence verbiage in the Purchase and Sale contract?


Depending on your state, Due Diligence verbiage is usually found in the Purchase and Sale contract on the first page.

Why is Due Diligence important?


Due Diligence is important because both Buyers and Sellers are free to ask any and all questions to try to complete a home sale. One of the most important things about this time period is the earnest money deposit paid by the Buyer at contract time.

In the event that the Buyer finds the home no longer meets their needs, because of inspection findings or any other reason at all, they are able to terminate the contract without penalty of loosing their earnest money deposit.

This period also protects the Seller. Once the Due Diligence period is over, if the Buyer decides they no longer want to buy the home for whatever reason, the Seller is able to claim the earnest money deposit while the Buyer forfeits their deposit.

Who does the Due Diligence period affect?


The Due Diligence period affects both the Buyer and Seller in a Real Estate transaction.

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