Buyer's Due Diligence
The Offer to Purchase contract allows potential Buyers of a property time to decide if they 1) can, and 2) desire to close the sale. This is known as the Due Diligence period, at the end of which Buyers may terminate the contract or agree to move to closing.
During a Due Diligence period, the property is more difficult to market to other potential Buyers. Therefore, Buyers’ offers may be considered stronger if the Due Diligence period is short, and your negotiated Due Diligence fee may be lower for a shorter period. (However, the period must still be long enough for Buyers to do their Due Diligence.)
Buyers can proactively shorten the Due Diligence period by doing some of their Due Diligence up front. While Buyers cannot do specific property investigation, they can get a lot of their loan assurances prepared. Some of that may change depending on the condition and cost of the property they ultimately decide to purchase.
Doing this Due Diligence work up front will entail little to no cost to Buyers, but by getting preliminary approvals, Buyers will be able to make offers with confidence and lead to a smoother transaction.
Due Diligence that Buyers may do up front includes:
- Meet with a mortgage lender.
- Gather all financial information the lender requires.
- Ask your lender for pre-approval information for a range of loan options.
- Line up insurance companies.
Your Realtor can help you with names of local lenders. The more you are able to do up front, the more likely your home search will be efficient, and the resulting purchase will be successful.