The Due Diligence process consists of the buyer’s review of the seller’s disclosures and any home inspections the buyer wants to make regarding the property:
- The physical condition of the property;
- The assessment of the roof, walls, and foundation; the condition of the plumbing, electrical, mechanical, heating and air conditioning systems and fixtures; the condition of all built in appliances;
In other words, the purpose of the home inspection is for the buyer to understand the condition of the property he or she is purchasing.
Here is what due diligence is not:
- It is not an opportunity for the buyer to reopen negotiations about the purchase price of the property.
- It is not an opportunity for the buyer to create a punch list of every tiny little defect, like a missing switch plate or screw, and ask the seller to repair each item.
- It is not an opportunity to ask the seller to replace appliances, furnaces, boilers or water heaters because they are old. (I never sell a property without a home warranty so if these older appliances fail, they are essentially insured.)
What if the Home Inspection Process Reveals Major Defects?
If the inspection reveals a major defect that buyer and seller could not have factored into the original negotiation, then it may be reasonable for the seller to repair the defective item so that it is functional.
If you are planning on selling your home, it may be a good idea to order a home inspection so you can address any maintenance items up front instead of in the heat of Due Diligence.
If you are purchasing a home, factor the home’s condition into your offer. Even brand new homes are not perfect. The purpose of the Due Diligence process is for buyers to understand exactly what they are buying. It not to open up a second negotiation or for a seller to cure every minor defect within a home.