Buying a home is a big decision and those decisions don’t end once you sign the purchase contract. You still have to get through the due diligence period. Consider this your ‘second chance’ to back out of the contract if you find something you don’t like. Each state has a different requirement regarding this period and how long it can be. This is your time to have the home inspected and check out other aspects of the home and neighborhood to be sure of your decision.
Are you not sure what to do during this time? Keep reading for some helpful tips.
This should go without saying but because lenders don’t require it, some buyers skip it. It’s worth the investment to get an inspection. This way you know anything that is wrong with the house from the start. The inspector will go through the house, looking at areas you would never even think to look and areas that the appraiser won’t look.
The inspector will provide you with a report that shows you everything that’s wrong with the house. He will also likely let you know how bad the issues are and what type of costs you can expect. This can help you make a decision regarding the home purchase.
In addition to the home inspection, you may want to pay for a termite inspection. Termite damage isn’t always visible to the naked eye. Only a trained inspector can tell if there is damage or potential damage that could affect your decision.
If the home was built prior to 1978, you’ll also want the home to be tested for lead paint. Lead paint can cause health issues and could require extensive repairs/work that could be costly.
Do Your Research
You’ll want to research more than the home itself. Now is the time to check out the neighborhood by doing more than driving through it. Of course, seeing for yourself what the area is like at different times of day and different days of the week is helpful. You should even take the time to talk to the neighbors and get the ‘inside scoop’ from them.
You should also contact the local police department to inquire about the crime rate or any registered sex offenders living in the area. You can also use the internet to search for any issues occurring in the neighborhood by conducting a search on the neighborhood name.
You’ll also want to know about the school districts, even if you don’t have children. This plays a role in the resale value of the home. Check out www.greatschools.org to see how the schools in the neighborhood rate.
Lastly, you’ll want to learn if the home is in a flood zone. Head on over to FEMA‘s website to find out if the home is in a flood zone. If it is, make sure you talk to your insurance agent to see what it might cost to get flood insurance, as your lender will require it.
Miscellaneous Items to Check During Due Diligence
The due diligence period is your last chance to check things like:
- Will your couch, bedroom set, or dining room table fit? If you have something that ‘has’ to come with you, then you should know if it will fit in the home.
- How much will utilities cost? You can ask the current owner for an estimate of the utility bills. You can also call the utility companies and get rates from them. Don’t forget about things like internet. Certain companies only operate in certain areas. If you have a favorite, you’ll want to know if they work in your area.
- Call your cellphone company to see if they offer service in your area. You might even want to talk to people that have this service so you can see how the service rates as each area has different coverage.
- Ask which school your children will go to and then tour the school. Seeing the school firsthand while the kids are in school can help you determine if it’s the right atmosphere for your children.
- Listen for noise nuisance. Is there an abundance of airplanes flying overhead? Is there a train nearby or is there excessive traffic? These things might make you change your mind so make sure you truly evaluate them.
Basically, the due diligence period is time for you to really get to know the home and the area. The honeymoon period of falling in love with the home is over. Now it’s down to the nitty gritty. It’s your time to figure out if this will work or not. Use the time wisely.