Are You Excercising Your Due Diligence? (Part 1)

Last week I posted a blog, Should I Sign That Buyer Agency Agreement?. This week I'd like to continue the discussion of things buyer's need to be aware of. In the State of Utah the Buyer Agency Agreement references Buyer's Due Diligence. What exactly is buyer's due diligence?

This is a question I get a lot from my buyer's as we are discussing the details of the agency agreement. And I always respond, "that's a great question, let's talk about it." I then whip out the copy of the Buyer's Due Diligence and we proceed to go through it line by line.

Buyer's Due Diligence is something that every buyer needs to be aware of. And in addition to being aware of it, they need to actually check the property out before purchasing. This is your right as a buyer, either exercise it or forfeit your right to object after the sale.

So what items should a buyer be concerned with? and why?

1. Building Code / Zoning Compliance: Does what you intend on doing with the property fit with the zoning? This actually can be a big issue for people. Take for example someone who wants to have horses on their property. Even though the home sits on an acre doesn't necessarily mean that it is OK with the city for you to house your horses there. And even though the owner you are buying the home from has his horses there doesn't mean the right transfers to you. This has been the source of much stress for home buyers. This also has to do with operating a business out of your home. Check this one out. It is important.
2. Rental of Property: If you are buying this home to rent, you better make sure that is OK. Here in Logan, Utah there are zoning laws for how many people can live in a rental dwelling. This has become an issue for some people that want to rent out a home to students. It is always better to check this out rather than assuming that it is ok.
3. Hazardous Waste and Toxic Substances: This is important and becoming ever so more relevant. I recently sold a home that tested positive for methamphetamine during an inspection. My buyer's are very happy that they followed my advice to have inspections done on the home prior to purchasing. They ended up purchasing the home, but only after the owner had the property properly cleaned.
4. Surveying and Staking: How upset would you be to find out a few years down the road after buying the property that what you thought were your property boundaries really aren't. What if you built a fence, a shed, etc. This can be a huge headache. If you are buying a place where the boundaries aren't clear you may want to have a survey done.
5. Home Warranty Plans: Do you know what a home warranty is? This is a great thing that is relatively low in cost and it protects you against many problems you could have with your home. Ask your agent about getting a home warrant plan. You will be thankful you did if anything goes wrong in your first year at the home.
6. Flood Zone and Insurance: If you are getting a mortgage your lender will most likely check this out for you. Flood insurance can be expensive.
7. Homeowners Insurance: If you have a mortgage loan you have to carry insurance on the home. Be advised that you should shop different companies to find out what coverage they are offering you. Homeowners insurance protects you against a lot of things that could happen. Make sure the coverage protects you well.
8. Title Issues / Homeowner's Association: It is wise to know the details of the homeowners association so you know what you can and can't do to your new home. Here in Utah you will have to get a policy of title insurance. This will cover you against leins on the home that could be found. Ask your agent to give you more information about this.
9. Physical Condition: You have the right to inspect the property prior to finalizing the purchase. I always advise my clients to hire a professional home inspector. They will give you a detailed report that reveals all problems and potential problems with the residence. This will give you the opportunity to know what you are getting into. Don't ever assume that everything is fine because the home looks good. There could be problems lurking in places you wouldn't expect.

Pull out the brown paper bag and take some deep breaths.That's a lot to be responsible for as a buyer. Now maybe you can see why having an agent can help you out in a big way. I'll give you some time to digest this before I throw out some other items you should be concerned with. Check back tomorrow for part 2 of this post.

Robert W. Bowen is a professional REALTOR®with RE/MAX Excel in Logan, UT. You can contact him with questions through his website, www.RobertWBowen.com, or calling (435) 770-1352.

• Rate this Post!

  Select Your Rating:

  • 5 Stars (Excellent!)
  • 4 Stars
  • 3 Stars
  • 2 Stars
  • 1 Stars (Poor)

• Share this Post

  Share With A Friend:

  Your Name Your Email

  Friend's Name Friend's Email

  Optional Message

  Send

• Print
• Social Bookmarking

  Add to Bookmarks: