Doing Your Homework Before You Buy
What’s “due diligence?”
It depends on what you’re buying.
If it’s a dozen eggs . . . it’s checking to see that none are cracked.
If it’s a multi-billion dollar corporation, it consists of poring over the company’s books, auditing its cash and accounts receivable, scrutinizing the company’s intellectual property portfolio and key vendor contracts — and about a million other steps.
Home Buyers’ Checklist
So, what’s “due diligence” for buying a home these days?
At least if you’re my client, the list includes:
–Having the home inspected by a knowledgeable, reputable inspector.
–Having a radon test performed.
–Checking out the home’s main sewer connection with a camera (optical inspection), unless the home’s age and location suggest that that’s not a concern (areas with sandy soil are at higher risk).
–Reviewing the Seller’s Disclosure, noting what is — and isn’t — discussed (note: I worry as much about a “too-clean” disclosure as I do about an unusually detailed one).
Follow-Up Steps
Of course, depending on what the home inspection turns up, additional steps may be required.
So, if the heat exchanger in the forced air furnace looks suspect, it is appropriate to bring in an HVAC contractor to follow up.
If there are questions about other items — for example, the chimney liner and/or cap, roof, foundation, wiring, etc. — it’s appropriate to pull in licensed contractors who specialize in those areas (in which case, the Inspection period is typically extended).
One Size Doesn’t Fit All
If the foregoing isn’t daunting enough, there are also special situations, where additional precautions are appropriate.
Exhibit A: homes clad with recent vintage stucco (late ’80’s/early ’90’s), which were built “tight” and trap any moisture between the home’s walls and exterior.
When the vapor barrier (think, Tyvek and similar) isn’t properly installed, there can be incipient mold issues, which eventually cause BIG problems.
As a result, due diligence for someone buying such a home is to hire an inspection company specializing in moisture intrusion to test moisture levels in the wall cavities.
Other Issues
Buyers also need to be cognizant of other issues not specifically related to the home’s condition, but which are still highly relevant to 
their buying decision.
That includes checking out the immediate area’s crime rate and any nearby housing for sex offenders (available on a state Web site); inquiring about the local school district’s reputation and any recent changes to same; and noting any other prospective developments affecting the neighborhood or immediate area (I seem to have read something about light rail affecting some choice Southwest Minneapolis neighborhoods).
Finally (and yes, there’s a finally), the Buyer should: 1) be represented by their own title company and closer, to make sure that the Seller is conveying good, clear title with no encumbrances or liens; and 2) hire a good Buyer’s agent, who’s sensitive to all the above issues and can guide their client through them.
Which, I suppose, just leaves how to do “due diligence” selecting a good Realtor . . . 🙂
