After the application of a home loan, you will receive two documents, a loan estimate, and closing disclosure. On the surface, these documents are identical but they both serve slightly different purposes. Up Next: Expenses To Expect In The First Year Of Homeownership Here is what you need to know about the differences between these […]
What is the Ideal Due Diligence Period?
When you put in an offer for a home you’d like to buy and have signed your real estate contract, you will have entered your due diligence period. The length of this period varies from contract to contract, depending on your needs and what has been negotiated with the seller.
Involved Parties Affect the Due Diligence Period
When buying a home, there are many parties involved beyond you and the seller. To name a few:
All of these parties must work together to make sure that the home buying and selling process is as smooth as possible. Depending on the services of each party you need, it can determine how long or short your due diligence period is. For example, if you have all of your finances in order and just need a home inspection, then your due diligence period may be shorter than if you need to find financing for the home as well.
Due Diligence Periods Are Negotiable
Since the needs of each buyer is different, you can negotiate the length of the due diligence period to suit your needs. For example, if you need time to find financing and insurance in addition to getting the home inspected, you will want to negotiate with the buyer for a longer time frame. Sellers want their home to be sold with as little hassle as possible. They will typically agree to a timeframe that will allow all parties involved to avoid hasty work.
The Recommended Due Diligence Period Varies
The recommended due diligence period is 30 days from the date your offer is accepted by the seller because of the multiple steps and parties involved when you are in the process of buying a home. At its shortest, the due diligence period can be 10 days.
During this time, you will need to complete tasks necessary to finalize your purchase of the home like finding insurance and completing home inspections. You can also legally back out of the deal if you find that the home is not for you.