If you’ve thought about buying a home, or started researching it, you’ve heard time and time again to “complete your due diligence!” You probably nod, knowingly, without actually understanding what that entails. Not to worry, though. Landmark Home Warranty is here to explain exactly what you need to do to complete your due diligence and purchase your home.
The term due diligence is a fancy way of saying you’ve done your research on your investment, and you know what you’re getting into. When you complete your due diligence on a potential home, you want to do this before buying the house. You should be completing this before and after entering into contract on a house. That way, if you find something unfavorable that isn’t going to be covered by home insurance, a home warranty plan, or the buyer, you won’t buy the home.
Pre-qualify for a Mortgage
Before you look at any houses, find the best deal for a mortgage. This may involve using a mortgage broker, who can complete the research for you, or jumping in and finding out for yourself. That isn’t to say that you should use the amount or money you’re pre-qualified for when determining the prices of homes you want to look at – you should determine your optimal price by looking at your budget.
Research the Neighborhood
Before buying any home, you want to make sure you know where you’re going to be living. Unfortunately, when you buy a house, you’re buying the piece of land it’s built on top of, including noisy neighbors and long commutes from work. Check out grocery stores, shopping malls, schools, nearby restaurants and, of course, your neighbors. Make sure all of these meet your standards of living. It’s a good idea to stop by on weekdays and weekends at different hours of the day to get a feel for how the community functions. If your home falls under a Home Owner’s Association, make sure you know the rules you’ll have to follow.
Read the Seller Disclosure Statement
All states have different laws that state what needs to be disclosed to potential buyers, and what does not. You should read through the seller’s disclosure statement and then ask questions based on this statement. This is a huge part of due diligence – remember, you, the buyer, are responsible for this home and its sale. You must be sure to cover all of your bases so you don’t end up with a costly mistake.
Get a Home Inspection
Once you’ve entered into contract on a home, hire a home inspector that you trust to look through the home and give you the state of its systems and appliances. As a home warranty company, we suggest hiring a few different inspectors: a general inspector, and then a trained HVAC inspector. If the general inspection reveals other problems, it’s a good idea to hire someone trained in that field to go through your potential home as well. Otherwise, the results could prove disastrous.
As a part of your due diligence, you should go through the home with the inspector(s). You will receive valuable information about the home’s state, and potential problem areas. You can ask the inspector questions while you’re looking at the problem areas, rather than after the fact.
Remember, if there are problems that must be fixed, do not assume that home insurance or a home warranty plan will cover the repair or replacement. Most of the time insurance and home warranty plans don’t cover problems that the sellers caused. It is your responsibility to bring this up to your real estate agent and seller, and get the problem fixed before you move.
Purchase Title Insurance
Getting title insurance is on everyone’s to-do list when buying a home; in fact, we even put it on our “complete guide to buying a home” post. A title company will research the home and make sure there are no ownership discrepancies, and provide insurance that will provide coverage if an inconsistency pops up over time. So where does the due diligence come in? As the buyer, you should be the one to choose and hire the title insurance company. Many times mortgage lenders will suggest a title insurance company, and buyers will go with them because it’s an easy decision. However, this is likely the most expensive purchase you’ll have ever entered into – don’t you want to vet and choose the best possible title insurance company for your new house? Make sure you pick the best company for you.
Get a Property Survey
Next, get the property surveyed. Once again, your due diligence is not having the survey done, but actively participating in its completion. Compare different property survey companies and choose the one that best fits your needs. A property survey company will tell you where your property lines are with a map. If you want to build something on your property later on, you will need a property survey to build. Most lenders want a property survey on file to make sure you’re getting a comparable value for the price you’ve paid. Another part of your due diligence many homebuyers don’t think of is attending the property survey. You will learn more about your potential land, and can make sure there aren’t any mistakes.
Purchase a Home Warranty
Next, research and find the best home warranty to cover your systems and appliances. Your home warranty may come with the purchase of your home (bought by the seller) or purchased by the title company during closing. Title companies and sellers don’t generally have the same vested interest in purchasing the best home warranty plan for the home like you do. This is another part of your due diligence: find the home warranty company and plan that you know fits your home the best. This may take some research, calls and comparing quotes, but in the end, knowing what’s covered in your home warranty plan and knowing you chose it out of all the comparable plans, is a great assurance.
Much like a home warranty, part of your due diligence is finding the home insurance policy that fits you and your home the best.
Are you going to be completing your due diligence by researching home warranties? Take a look at Landmark Home Warranty. We have been recognized as the Best in State Appliance Services, as well as the Best Home Warranty in our Region by Home Warranty Reviews.com. You can compare our home warranty plans here, or learn more about our company on our main page.