Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
So we are now under contract and the due diligence period had to be fast laned up to July 8th. We are a first time home buyer and try to make rational informed decisions when it comes to purchases.
When asking our realtor/agent about the Due Diligence process he was a bit vague, paraphrasing, but besides the inspection he suggested we walk the neighborhood and talk to neighbors. Get our heads right about the purchase.
I can see some value of talking to neighbors and walking the street to obtain info like traffic patterns, general neighborhood feedback, or any of the observations about the home and it's prior owner. But all of those things are far secondary in my mind to our primary concern "the house".
Can anyone list a clear set of instructions we can follow for due diligence. We are getting an inspection but what else? I'm getting copies of utility statements. Should we have a property survey done? It feels like we are potentially missing something.
An appraisal is often a good way to be sure you don't over pay but, if you are getting a loan, your lender will probably require one. Same goes for a survey and usually the title agent handles it but be sure to ask. Also, ask to see if they will check for open permits on the property and select an inspector who checks the appliances and major systems for recalls, if you can.
Down here, the rainy season has roared in and we are running into problems with roof leaks. Of course, that means that roofers are busy and difficult to get for in-depth inspections or estimates. I'd factor things like that into your timing or, at least, talk it over with your agent so you have a plan ready if you run into those types of things and your inspection deadline is looming.
I'd be sure that you have a wood destroying organism inspection, too, and any tests that are suggested based on your location. Radon, mold, that sort of thing. Don't assume that your home inspector does all of those things. Additionally, ask your agent to confirm that the utilities are on/working for the inspection. Otherwise, the inspector can't give you a full report.
There are many more things. Ask your agent AND your closer, title agent, or attorney what they are doing for you and what they suggest you do in addition.
Depending where you live, due diligence period can mark the last date when you can walk away from the deal without losing earnest money. In NC where I live, earnest money is collected and also due diligence money. If you walk away you lose the due diligence money no matter what but, if you walk away by the due diligence date, you get your earnest money returned.
That doesn't give you much time to schedule any home, pest, and/or radon inspections and to negotiate repairs and, also to receive your appraisal.
Typically it is a good idea to make sure due diligence period allows for you to receive appraisal or, if not, that your contract has an appraisal contingency that permits you to walk away if the home does not appraise and you are not able to pay out of pocket the difference between your loan amount (lender will not loan more than appraised value) and the contract price. That is assuming that the seller will not drop price to the appraised value to keep the sale moving forward.
As a sidebar question on expectations and the process. Let's say the seller discloses there is a problem with the basement fireplace and the garage door. They also specify that they changed the roof and ac compressors 15 years ago.
So we have four issues two they acknowledge that are defects and two large ticket items nearing the end of their useful life but likely still functional.
Would we only seek compensation for the two known defects or should we also be asked to compensated for the roof and ac that could go at anytime? The defects might cost $5k combined two fix but the other two might be $15k combined. Would you ask $20k credit for repairs or present it as look the total replacement and repairs will cost $20k let's split it In half?
Finally if they agree on an amount do we get this as a credit to go fix and the purchase price remains the same? Or would they simply drop the purchase price by that amount and we would have to fund the repairs out of pocket?
As a sidebar question on expectations and the process. Let's say the seller discloses there is a problem with the basement fireplace and the garage door. They also specify that they changed the roof and ac compressors 15 years ago.
So we have four issues two they acknowledge that are defects and two large ticket items nearing the end of their useful life but likely still functional.
Would we only seek compensation for the two known defects or should we also be asked to compensated for the roof and ac that could go at anytime? The defects might cost $5k combined two fix but the other two might be $15k combined. Would you ask $20k credit for repairs or present it as look the total replacement and repairs will cost $20k let's split it In half?
Finally if they agree on an amount do we get this as a credit to go fix and the purchase price remains the same? Or would they simply drop the purchase price by that amount and we would have to fund the repairs out of pocket?
If they acknowledged that in the disclosure then I would think that it was priced to reflect the state of the house. I'm not sure if you would ask for credits for things that you had knowledge of when you made the offer.
As a sidebar question on expectations and the process. Let's say the seller discloses there is a problem with the basement fireplace and the garage door. They also specify that they changed the roof and ac compressors 15 years ago.
So we have four issues two they acknowledge that are defects and two large ticket items nearing the end of their useful life but likely still functional.
Would we only seek compensation for the two known defects or should we also be asked to compensated for the roof and ac that could go at anytime? The defects might cost $5k combined two fix but the other two might be $15k combined. Would you ask $20k credit for repairs or present it as look the total replacement and repairs will cost $20k let's split it In half?
Finally if they agree on an amount do we get this as a credit to go fix and the purchase price remains the same? Or would they simply drop the purchase price by that amount and we would have to fund the repairs out of pocket?
I may be wrong but it is my impression that if items are listed on the real estate disclosure that you receive before making your offer, the seller/agent has priced in accordance with those items and you would be making your offer with the assumption that they are as-is, otherwise the seller would have repaired or replace prior to listing the house.
On the other hand, items that come up on the inspection that were not on the disclosure are fair game to negotiate. If you walk away based on failing to come to terms with the inspection report and there are big ticket items, the seller would then be obligated to either fix them before making listing active again or add them to the disclosure so the next potential buyer is aware.
Usually if items are functional, it is hard to get replacement unless you can get an inspector's report that proves otherwise. If you are worried about HVAC, you might ask for home warranty as part of your contract.
If they acknowledged that in the disclosure then I would think that it was priced to reflect the state of the house. I'm not sure if you would ask for credits for things that you had knowledge of when you made the offer.
The seller disclosures were not provided until after they accepted our offer and when we went under contract. From going under contract we have from now until July 8th to complete due diligence and potentially back out or re-negotiate without penalty.
The disclosures were not known when we priced in our offer.
So the next question would be, did your realtor fail to obtain the disclosure and present to you prior to submitting your offer to purchase? In NC, the seller's agent has to have that on hand and available to potential buyers who are interested and ask for it. Because of that, we would never make an offer without seeing the disclosure first.
The seller disclosures were not provided until after they accepted our offer and when we went under contract. From going under contract we have from now until July 8th to complete due diligence and potentially back out or re-negotiate without penalty.
The disclosures were not known when we priced in our offer.
Did they not disclose until after the offer or did you not receive it until afterwards? If the latter, then your agent dropped the ball. I've seen disclosures even before seeing the house but definitely before thinking of an offer bc the seller provides them before listing and your agent should have access.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
