Step 7 – Due Diligence
Now that you have a negotiated agreement, the clock starts running for many items needed to meet the requirements of the agreement and your protection. I will assist you in finding qualified, responsible professionals to help you with tasks you will be doing during this time.
Step 6 – Due Diligence Items
– Title Work. You will receive information about the property from the title company. What you want to check is your name(s) to make sure it/they are spelled correctly. The purchase price of the home should be on the title work.
The name of the sellers will be on the title work. Those names need to match the names on the contract, and the signatures on the contract.
The title company will also send a Tax Certificate showing that the taxes are paid, or if not, they will be paid out of the sellers’ proceeds at closing.
– Home Owners Documents. If there is a home owners association, you will receive all of the documentation regarding the association. You will get the Rules and Regulations, the By-Laws, all the financial documents, HOA meeting minutes and anything else that should pertain.
– Seller’s Property Disclosure. This is a document that the seller fills out regarding what is included in the house sale, what works, what doesn’t and what is excluded. This is filled out with the seller’s best knowledge at the time. This is a document that you should take to the inspection with you, and share any of the concerns or red flags with the inspector.
– Survey. If you are buying a home in a platted subdivision like Highlands Ranch, you might not need a survey. This is more dependent on the Title Company or Lender. If you need to order one, you will order an ILC – Improvement Location Certificate. They run around $150-200.
If you are buying a home with acreage, you will probably want to see if the sellers have a survey and if not, you’ll want to order one. Survey costs vary due to property size and location.
– Inspection. You will want to hire a home inspector to do an inspection with you at the home. This is your chance to get up into the attic, the crawlspaces, the roof, places that you and I don’t see. The inspector will tell you things that are good, bad and ugly. This is a cost that you will need to pay at the time it is done.
There are major categories that need to be addressed: Structure, Plumbing, Electrical, Roof, Heating/cooling systems and the grounds around the home.
– Property Insurance. You will need to call your insurance agent and arrange for homeowner’s insurance.
– Due Diligence Documents. If you are purchasing a home that has been a rental, has a renter in it, you will want to review the income statement from the seller, find out who is holding the damage and security deposits.
After all of these steps have been met, you can move forward to closing. The lender during this time is also asking you for various things like more documents.