Sellers 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, the shorter the Due Diligence period, the better for sellers. However, the period must be long enough for Buyers to do their Due Diligence, or there is a risk they may terminate.
Sellers can proactively shorten the Due Diligence period if they provide Buyers with much of their Due Diligence up front. While Sellers cannot provide loan assurances, they can perform most of the property related Due Diligence. Buyers can be expected to verify or duplicate some of this work, but their confidence in the transaction is much higher if they have independent verification of the property’s condition and status.
Doing this Due Diligence work up front will entail some cost for Sellers, but you may be more likely to attract an offer, and will certainly be better prepared to move confidently through the Due Diligence process.
Due Diligence that Sellers may do up front includes:
- Get your home pre-inspected, and either complete the repairs or get price estimates for repairs. Presenting an inspection report and invoices or costs for repair will assure Buyers your home is in tip-top shape.
- Have your survey available and update it if you or a neighbor has done anything near a property line. You are responsible for clearing up issues anyway.
- Get a new appraisal. Appraisals have caused more contracts to fall apart than almost any other reason. If you get a new appraisal, you will price with assurance and the buyer will have more faith in your home’s value.
- If you are anywhere near a flood zone, get an updated flood map.
- Have your insurance agent provide a C.L.U.E. report on your home.
- If on well/septic, test and inspect and provide permits.
- Fully provide any HOA documentation.
- Consider a Home Warranty for extra buyer reassurance.
Your Realtor can help you get most of these Due Diligence items accomplished. The more you are able to do up front, the more likely your home will attract Buyers, keep the Due Diligence period short, and result in a successful sale.