The term due diligence generally refers to any period of time where an asset for sale is examined. In real estate it usually refers to a period of time where a buyer can examine or otherwise consider a property for which they're under contract - and pull out of the transaction if they find something unsatisfactory or undisclosed.
In Georgia, when you enter the due diligence period, in which, the buyer, does all relevant inspections and decide whether or not you would like to proceed with the sale. The seller is bound to the buyer and cannot enter into other contracts for the sale of the home (except as backup)– but the buyer is free to terminate the contract with no penalty and get the earnest money back.
During this period the buyer should independently verify any information provided by the current owners with a third party source because many owners, even if well-intended, are unaware of certain factors that may affect your decision. Remember, it is the buyer's responsibility to conduct their own research during this period and to verify all information.
During this period, the buyer should schedule the home and termite inspections, order the survey and research information about flood plains, power lines, and zoning. If you are buying a home with an HOA or a condo, make sure that understand the bylaws of the homeowner's or community associations and that you know what the annual or monthly required fees are and what services are included in those fees.
Equally important is to inspect the neighborhood, some things to research during the due diligence period include proximity to any places or facilities that you might find troublesome such as a landfill, prison, cemetery, etc. It’s important to research local schools, crime rates. Additionally, you might also want to find out more information about your potential neighbors, including a violent sex offender search at the Georgia Bureau of Investigation website.
Generally speaking, the most common reason that a buyers terminates a contract during due diligence is that the inspection uncovers an issue that the seller is not willing to fix. But remember, the buyer can terminate the contract for any reason and they get the earnest money returned.
Don’t be afraid to make an offer in a home, you could be the backup contract but remember, there is a lot of competition in the market right now for homes in the lower price points (especially those purchasing below $150,000) Because simply there are not enough homes listed.
So if you want to beat the competition, it’s highly recommended to present your best offer as quickly as possible, with proof of funds or pre-qualification letter and use the due diligence period to fully investigate it and ensure you want to go forward with the purchase of the property.
Please do not hesitate to contact me if you have any questions or for a free consultation.
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