Purchasing a house can be exhilarating. Whether you found something to fit the needs of your growing family or are downsizing now that your kids are on their own, finding a place that meets both your needs and your budget can entice you to bid as quickly as possible to secure a deal.
For whatever reason, at times you may be able to find an affordable price on a property that would otherwise be out of your reach. However, it is wise to make sure you do your due diligence before agreeing to the purchase terms of your new home.
In terms of real estate transactions, what does due diligence entail?
Whether this is your first experience with real estate or you have been through the process before, a thorough investigation of a property can help you protect your interests. In many cases, if you find problems with the property prior to closing, you can renegotiate terms, holding the seller responsible for repairs.
Before closing on a property, some things you ought to consider include:
- Appraisal. An examination of the condition of the property, lot size, and upgrades, compared to other similar homes in the area, can determine whether the sale price is appropriate or if the seller must reduce the price in order for the lender to approve your loan.
- Inspection. Hire a certified home inspector or licensed contractor to inspect the building for any problems with the condition of the property, including things which could be harmful to your health, such as water damage, lead-based paint, and radon gas.
- Association. Many homes have homeowners associations (HOAs) which determine the use and appearance of the community.
- Disclosures. Minnesota laws require a seller to inform you of anything they are aware of that could significantly affect your “use and enjoyment of the property.”
Doing your due diligence before closing could prolong the process or increase the financial investment necessary to get into your new home. However, gaining more information about your new property could save you thousands of dollars in repairs, protect your health, and give you peace of mind as you begin your next chapter in your new neighborhood.