What is Due Diligence?
When you buy or sell a home, due diligence is the period and the process where each party verifies the facts, confirms the condition, and makes informed decisions before closing. In Georgia, the due diligence period is a negotiated window of time that begins after a binding contract is signed. During this window, the buyer may inspect the property, review documents, and cancel the contract for any reason within the agreed time frame, typically with a return of earnest money if the contract allows it.
Sellers also use this time to confirm the buyer’s strength and keep the path to closing clear. So, what is due diligence? It is a careful investigation period used to verify a property’s condition, facts, and potential risks before buying. Let us take a closer look at due diligence.
Why Due Diligence Matters
A home is more than a purchase price. It is a structure, a set of legal rights, and a place with ongoing costs and responsibilities. Due diligence protects you by revealing issues early, setting clear expectations, and preventing surprises after closing. It is the difference between hoping a home is right and knowing it is right.
What Buyers Do During Due Diligence
Whole Home Inspection
Hire a licensed inspector to evaluate the roof, foundation, plumbing, electrical systems, heating and cooling, windows, doors, appliances, and overall safety. The inspection report guides repair requests, price adjustments, or in some cases, the choice to walk away within the due diligence window.
Specialized Inspections
A general inspector may recommend further evaluation. Common follow ups include roof, structural, sewer scope, septic, chimney, pest and termite, mold and moisture, radon, well and water quality, pool, and sprinkler systems. In older or historic homes, you may also add lead based paint and asbestos screening.
Title Search and Legal Review
A closing attorney or title company confirms that the seller can deliver clear title. This includes checking for liens, unpaid taxes, boundary disputes, or restrictions that might limit use. Order a survey if lot lines, fences, or easements are unclear, and review any recorded covenants that affect renovations or future plans.
Appraisal and Financing
If you are obtaining a loan, the lender orders an appraisal to confirm value. Use this time to lock your rate, satisfy underwriting conditions, and provide any documents your lender needs. If the appraisal comes in low, you can negotiate price, bring additional funds, or exercise a contract contingency if available.
Insurance and Risk Checks
Obtain homeowners insurance quotes, review any past claims if available, and confirm flood zone status. If the home sits in a special flood hazard area, your lender will require flood insurance. Ask your agent about wind, hail, and other regional risks that can affect coverage and premiums.
Association and Community Documents
If the property is part of a homeowners association or condominium, review covenants, budgets, reserve studies, rules, pet policies, architectural guidelines, and any pending assessments. Request meeting minutes to identify possible future projects or fee increases.
Local Checks
Verify zoning, permitting history, and any open code issues. If you plan improvements, such as an addition or accessory dwelling unit, confirm feasibility now. For historic districts in Macon, verify whether exterior changes require approval.
What Sellers Do During Due Diligence
Prepare and Disclose
Provide accurate disclosures and records such as permits, warranties, and service receipts. Transparency builds trust and keeps momentum strong.
Coordinate Access and Quotes
Allow access for inspections, keep utilities on, and respond promptly. If repair requests arise, gather contractor quotes to negotiate accurately.
Stay Organized
Have payoff information, HOA statements, and repair receipts ready. A clean file avoids delays.
Negotiating Outcomes
After inspections, buyers often request repairs or credits. Sellers may agree, counter, or decline. Focus on safety and major systems rather than cosmetics. Get agreements in writing and set timelines aligned with closing.
Timing and Strategy in Georgia
Due diligence periods in Georgia are negotiable. Competitive markets may favor shorter timelines. Schedule inspections quickly, queue specialists if needed, order the appraisal early, and stay proactive with lender requirements.
Cost Planning
Budget for inspection fees, specialized tests, survey, appraisal, and insurance. Sellers often benefit from pre listing repairs or a pre listing inspection to avoid surprises and preserve momentum.
Tips for a Smooth Process
Move quickly, communicate clearly in writing, and support requests with reports, photos, and quotes. Keep emotions low and solutions high, understanding that every property has a few issues. The goal is clarity and progress.
The Bottom Line
Due diligence is both a safeguard and a roadmap. It confirms value, reveals risk, and provides each party the chance to solve issues before closing. With the right plan, proper support, and a skilled negotiator in your corner, the process leads to clarity and confidence.
Still have questions about due diligence? You are not alone. Here are answers to some of the most common questions buyers and sellers ask.
Frequently Asked Questions About Due Diligence
How long is the due diligence period in Georgia?
The due diligence period in Georgia is negotiable. A typical range is seven to fourteen days, but competitive situations may result in shorter timelines.
Can a buyer cancel during due diligence?
Yes. In Georgia, a buyer may cancel for any reason within the due diligence window, and typically receive their earnest money back if properly terminated according to the contract.
What happens if issues are found during inspection?
The buyer can request repairs, negotiate credits, or choose to walk away during the due diligence period. Most sellers work toward a fair solution to keep the contract moving forward.
Do sellers have to make repairs?
No. Sellers may decline repairs, but buyers then have the option to negotiate or cancel within the due diligence period. Skilled negotiation helps both parties find a realistic solution.
Is a home inspection required?
Inspections are not legally required, but strongly recommended. They protect your investment and provide clarity about the home’s condition.
What if the appraisal comes in low?
Options may include renegotiating the price, bringing additional funds, or terminating if a financing or appraisal contingency applies. A strong agent helps navigate this conversation.
Can a seller do due diligence too?
Absolutely. Sellers confirm buyer financing strength, timelines, and transaction readiness. A proactive approach creates a smoother path to closing.
Disclaimer, this article is for general educational purposes only, not legal or financial advice. For advice on your specific situation, consult a licensed real estate professional, attorney, or financial advisor.
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