When you’re buying or selling real estate, you expect the process to go smoothly. And it can in most instances, but problems can always pop up. That’s why conducting due diligence prior to closing is so essential. This reduces the risk of unexpected issues derailing your closing or forcing the deal to fall through. Here’s what your Minnesota real estate lawyer wants you to know about due diligence in real estate transactions.
What Is Due Diligence?
Due diligence in real estate refers to the process of researching everything you can about the property prior to purchasing it. This involves going through financial information to make sure there aren’t outstanding liens on the property, checking on maintenance records if available, securing information about the property itself, and other similar tasks.
It’s a way to gain a complete picture of the property’s history and condition before you close on the sale.
What Is Its Role in Real Estate Transactions?
The point of due diligence is to help buyers make truly informed decisions about properties they’re interested in. If you purchase a home without conducting due diligence, you risk legal issues like outstanding liens that could make the property more expensive than you think it is.
What Due Diligence Looks Like
The exact tasks you’ll need to complete will depend on the property you’re buying and the concerns you have. But there are some tasks that you’ll want to complete as part of the due diligence process regardless of the property you’re buying. This includes the following:
- Home inspection: The home inspection conducted by a licensed inspector gives you insight into the condition of the property. They’ll walk through the entire property, checking for any hidden or easily missed maintenance issues, damage, and other concerns. When they’re done, the inspector will put together a report detailing their findings. You can use those findings to request that the seller make repairs or back out of the sale if needed.
- Home appraisal: The appraisal is a way for your mortgage lender to ensure that the property is worth at least the amount that you’re borrowing. If the appraisal shows that the home is not worth what you’re paying, your financing may fall through.
- Title search: The title search is designed to uncover any liens, hidden claims, or lawsuits that could impact your ability to own the property. If any concerns are uncovered, you may be able to get the seller to pay what’s owed or you could back out of the purchase.
- Disclosures: Sellers are expected to disclose known defects to the property. This could include known roof damage, lead-based paint, asbestos, and other possible safety hazards. If they don’t volunteer this information, you can ask your real estate agent or Minnesota real estate lawyer to submit a request on your behalf.
The due diligence process is designed to give you peace of mind when buying a new home or property.
What to Do if Issues Come Up
Interpreting the findings of the due diligence process and coordinating everything so the purchase can proceed on schedule can be difficult for buyers. You have other things to worry about like work, selling your old home, finding movers, and more. That’s where a real estate lawyer can help. They can review the findings, communicate with the title company, and give you a better understanding of whether the property is worth purchasing.
Schedule a Consultation Today
If you’re thinking of buying a property, working with a Minnesota real estate lawyer can take the stress out of buying a new home. At Waypoint Law, our team understands how stressful and costly buying a home can be. Our dedicated lawyers will represent your interests and help you make sure the home you’re buying is worth the investment. Contact us today to schedule a free consultation.