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Contract Execution!
Congratulations! The seller and you have successfully agreed and signed the contract!
Now the home purchase process begins.
Types of Due Diligence
Your due diligence on the home is more than just an inspection. You’ll want to do all of the following:
Inspections
You will certainly want to have a general inspection done on any property you are buying. Depending on the property condition and particulars, you may want to have additional, specialized inspections done as well. Most lenders require a pest inspection (formally called a wood-destroying-insect (WDI) inspection), which is recommended even if it is not required.
Title Search / Commitment
Your title company’s title commitment is a form of inspection. They are allowing you to inspect, the title for any issues.
Review HOA and Deed Restrictions
With the title commitment, now is the time to review the HOA documents and deed restrictions. If you do not have them already, you should be getting copies of the relevant HOA documents either from their website or the seller. Look through to make sure there are no restrictions on how you use your property that you really need.
Review Leases
If you are buying a multi-family or a rental, you are also buying any leases currently in effect on the property. You cannot void a lease simply because the home transferred ownership. Be sure to inspect all the leases provided by the seller to ensure there are no terms that are unfavorable.
Review Survey
Usually, the lender will require a survey. It is a good idea to review the survey since it shows what land you are actually buying. This is especially important for acreage or large lots, where there are more often mistakes in the survey or issues like encroachments when one neighbor builds a fence seven feet on the wrong side of the survey line.
Bottom Line
By the end of your option period, you should have done everything to ensure you are happy with your home decision. There is seldom turning back after the option period without losing at least your earnest money. While still in the option period, you can leverage your prerogative to leave the deal when negotiating with the seller to resolve issues or make repairs.
Next > The Inspection
