Due diligence is the buyer’s organized investigation of a property before closing. It uncovers defects, title issues, zoning restrictions and hidden costs so you can make an informed decision and avoid costly surprises.
Buyers need due diligence to assess risks and negotiate repairs or credits. Sellers should know the process to prepare disclosures and streamline negotiations. Agents and attorneys rely on it to protect their clients’ interests.
In real estate, due diligence is the period after signing the purchase contract when the buyer conducts inspections, reviews documents and verifies facts to decide whether to proceed, renegotiate or walk away.
An inspection contingency typically covers structural and systems checks. Due diligence is broader, encompassing title, survey, financial review and more.
The purchase and sale agreement sets a due-diligence period—often 30–90 days—during which the buyer pays a deposit and conducts investigations. It defines deadlines for inspections, disclosures and cancellation rights.
Arrange professional inspections for foundation, roof, plumbing, HVAC, electrical systems, pests, mold, asbestos and lead to identify repair costs.
A land survey confirms lot lines, easements and encroachments. It prevents boundary disputes and reveals zoning setbacks or access issues.
A title search uncovers liens, easements and ownership defects. Title insurance protects against future claims or disputes.
An appraisal by a licensed professional verifies fair market value, ensuring the loan amount matches the property’s worth.
Examine seller disclosures, homeowners association bylaws, meeting minutes, budgets and any tenant leases to spot fees or restrictions.
Most due-diligence periods run 30–90 days from contract signing, depending on deal complexity and state laws.
Submit a written amendment before the deadline. Both parties must agree in writing to extend or shorten the period.
Key dates include inspection completion, financing approval, appraisal delivery, title commitment and final cancellation notice.
Buyers generally cover inspection, survey, appraisal and attorney fees. Sellers pay for providing disclosure documents and clearing title issues.
Earnest money is a deposit showing buyer seriousness. If you cancel within due diligence, it’s refundable; missing deadlines can make it non-refundable.
Set aside 1–3% of the purchase price for repairs uncovered during due diligence. Be ready to negotiate credits or price adjustments.
Buyers can submit repair requests or ask for closing cost credits based on inspection findings or unsatisfactory disclosures.
Sellers must truthfully disclose known material defects, past damages, boundary disputes and any environmental hazards.
Within the due-diligence window, buyers can cancel for any reason and recover their earnest money by following contract notice requirements.
To cancel, submit a written termination notice before the due-diligence deadline. Keep proof of delivery to ensure your deposit is returned.
Hire a real-estate agent familiar with your market, a qualified home inspector and a real-estate attorney.
Book inspections and surveys early in the window to allow time for follow-up tests or specialized assessments.
Analyze inspection reports, title work and disclosures line by line to spot inconsistencies or missing information.
Submit a repair request or credit memo detailing needed fixes, cost estimates and proposed adjustments to the purchase price.
Record all agreements, contract amendments and any termination notices in writing to protect your earnest money.
Typically 30–90 days, but shorter windows (10–15 days) are common in competitive markets.
Yes—extensions require seller approval. Waiving the contingency speeds closing but removes your right to back out without penalty.
No. If you cancel within the due-diligence period, you can walk away and reclaim your earnest money.
Agents handle most logistics, but an attorney ensures legal documents and title issues are properly vetted, especially in complex transactions.
General home inspections run $300–$600. Pest, mold, radon and HVAC checks add $100–$400 each.
Keep signed inspection reports, emails, amendment forms and termination notices with time stamps.
Yes—provided you terminate before the due-diligence deadline in accordance with the contract’s notice requirements.
Due diligence is your opportunity to verify property condition, title status, legal compliance and financial viability before committing.
Create a due-diligence checklist with dates, schedule reminders and keep a shared folder of all documents and reports.
Use findings to negotiate repairs or credits early, clear title issues promptly and maintain clear communication with all parties to stay on track for closing.
