Due Diligence, the Exciting Ride to Home Ownership

Yeah, you have started a contract on your new home! The world is swirling around you (and possibly you are getting a bit nauseous) from the carousel of home buying activity. But before you jump onto the BIG roller coaster of home ownership, there are a few things you need to do during your Due Diligence Period.

That Looks Awfully Dangerous…What is Due Diligence? 

Think of Due Diligence as that exciting time of waiting in line just before you jump on the ride of Home Ownership. This time is the period in which both the buyer and seller have agreed on a purchase, signed the contract and are moving ahead to Closing. Usually the “wait time” for a Due Diligence (discovery) Period is traditionally around 10 days, however it can be extended if agreed up on by both parties.

During this time a bit of preparation is needed to assure that all parties are ready to jump on board. It also is the time when if the ride is not what it appears to be, like many of us who jump out of line at the sight of that triple-decker roller coaster, the home buyers can choose to leave the negotiations.


Often causes for stepping out at this point in the home purchase are failed home inspections or a lack of meeting the financial criteria. REMINDER, a signed contract at this point is binding, simply changing your mind on a home at this point without a valid reason could mean forfeiting your earnest money.

While Due Diligence may seem a bit scary at first knowing what the “heights” are will help you in soaring through this exciting time of discovery. So what are the elements of this thrill ride?

Inspections, Features of the Due Diligence Roller Coaster.

While most home buyers are familiar with the home inspection process in terms of the structural integrity of the house, inspections entail a bit more than the home’s building materials. Inspections should include other possible issues that could wind up costing new homeowners more than a couple tickets.

Inspections of the Property
Buyer Beware! While a home inspection may not be required for purchase, it is HIGHLY RECOMMENDED. A home inspection will alert you to structural issues that could cost you more than a ride ticket. Your home inspection should not only cover the framework but also, roofing, electrical, plumbing and HVAC.

But do not forget other lesser secondary items such as the fireplace. A chimney fire could mean replacing a fireplace unit costing upwards of $3,000! Realizing that this wonderful feature is no longer safe and functional could really put a damper (no pun intended) on your new purchase.

Look for Home Inspectors that are certified by ASHI (American Society of Home Inspectors), as they are only certified to inspect homes after completing 250 inspections.  Remember while a home inspection can alert you to potential issues, it does not require that the seller fix them. Often any issues found during inspection become a part of the negotiation process.

Termite Inspection
This is an ABSOLUTE in terms of not only assuring home buyer confidence but also solidifying financing and home insurance. While the State of Georgia does not at this time require a termite inspection be performed, it is highly recommended. In addition, many home loan financiers, in particular the FHA (Federal Housing Administration) will require this inspection before moving forward with the loan application process.

Generally, this inspection is performed by the home seller and an Official Georgia Wood Infestation Inspection Report or “Termite Letter” is often presented reflecting the inspection passing. The cost is normally in the $45-$100 range. It is however very important that if the seller does not perform this inspection that the buyer does. In Georgia subterranean termites cost homeowners around $2 billion dollars a year in damages. Not quite the scary ride you want when buying your new home.

Radon Inspection
Radon is a radioactive, cancer-causing gas that is emitted naturally through the ground. The gas itself is odorless, tasteless and is invisible to the eye. Homes with a 4 pCi/l EPA level are exposed to up to 35 times of that acceptable living next to a nuclear waste facility. While the evidence of radon existence does not always indicate a hazard, most families do want to be aware of the level present to make an informed buying decision. The good news is that many issues with Radon can be fixed by do-it-yourselfers sometimes for as little as $500.

 
Land Surveys and Easement Notifications
There is nothing worse than finding out that your beautifully constructed fence is built on your neighbor’s property. Or even better realizing you cannot enter your property because your driveway crosses property lines and no easement is on record. Stepping over the line cannot only cost you a turn but can set your household up for a lifetime of battles with the neighbors.

Make sure that your potential home includes an accurate site plan or property blueprint with any easements noted.

HOA Bylaws and Covenants
One of the most common surprises to new homeowners is the rules and regulations that are attached to their new home via HOA (Home Owners Association) Bylaws and Covenants. At times these regulations can seem as innocent as keeping your lawn maintained to as detailed as the color of your window shades.

With HOA fees tallying up to in some cases $1,000+ a year for homeowners, it is worth reading the fine print before hopping into the roller coaster seat. 

*Two for One Ride Special
Do not forget while checking out the HOA Bylaws and Covenants you will also want to tour the neighborhood. Review the subdivision layout, research crime rates and find out about the schools in the area. Ask the neighbors about the perks as well as any negatives the location could have.

The Ride is Worth it!

While home ownership can be a thrilling new ride it always pays to be ready for the twists and turns. Through the attention to the Due Diligence Period process, home buyers can assure that their ride to home ownership will be all they bargained for with no added jolts.

For more information on riding through the Due Diligence process of selling or buying a home, please visit my site at www.pamsantoro.com. You can also contact me at 678-656-6627 if you have any questions about local market conditions, financing or anything that can help you with in your search for real estate. Remember, no one sells a home like a Mom!

Roller Coaster Images courtesy of Morguefile.com
Home Inspection Image courtesy of ddvampa@freedigitalphotos.net