Homebuyers

What is Due Diligence in Real Estate? A Buyer’s Guide to Getting It Right

An accepted offer on a home is an important milestone for a homebuyer—but it’s not exactly the finish line. Between an accepted offer and the closing table lies one of the most essential phases of a real estate transaction: due diligence.

This is the period when buyers are given the opportunity—and the responsibility—to verify that the property is in sound condition, legally and physically.

“Due diligence in real estate means carefully checking everything about a property before you buy it, so you don’t run into problems later,” said Branden Rivero, a real estate agent with Prop Hunters in Miami Lakes, Fla. “You’re making sure the property is a good investment and doesn’t have hidden issues.”

Dotting i’s and crossing t’s is not the most exciting stage of buying a home. But it’s where you get the information that allows you to move forward with confidence—or pause on the deal if needed.

What is due diligence in real estate?

Due diligence refers to the period between a buyer’s offer being accepted and the deal becoming final. The exact length of this due diligence period varies depending on the terms of each contract, but the purpose is universal: to give the buyer time to gather as much information as possible about the property.

“During this time, the buyer wants—and needs—to make sure that everything is in order with the property,” said Seamus Nally, CEO of TurboTenant. “That includes getting a home inspection, doing a title search, getting an appraisal, reviewing the contract, and more.”

Each of these steps plays a role in confirming that the home is not only desirable—but viable.

Start with the inspection

One of the first things to schedule is the home inspection. This is your chance to find out what might need fixing—now or in the near future.

A licensed inspector will look at the house’s overall condition. They will check things like the plumbing, electrical, heating, and cooling systems, as well as the roof, foundation, and structure.

If the report reveals issues, you can ask the seller to make necessary repairs, request a credit, or reconsider your offer. In some cases, you may decide to walk away altogether, depending on your contingencies.

 Confirm legal ownership with a title search

The title search is a less visible—but equally critical—step in a buyer’s due diligence process.

This legal review ensures that the seller has the right to transfer ownership of the home and that there are no outstanding liens, disputes, or restrictions on the property.

Even when a lender needs title insurance, buyers should think about buying their own owner’s policy for more protection. It’s a modest cost that can prevent major complications down the line.

The appraisal

Most lenders will also require an independent appraisal of the property. This confirms that the home’s market value supports the purchase price—and protects both buyer and lender from overpaying.

If the appraisal comes in below the agreed-upon offer price between buyer and seller, the buyer may need to renegotiate or make up the difference out of pocket. 

Stick to the timeline

Real estate deals run on deadlines. The due diligence period often includes specific dates for inspections, financing approval, and closing.

“Due diligence means adhering to the deadlines in a purchase agreement and completing each step in a timely manner,” said Jason Gelios, a Michigan-based real estate professional.

“A homebuyer client of mine tried to delay the closing on their new home because they preferred to close at the end of the month,” added Gelios. “While this is completely understandable, it conflicted with due diligence written into a purchase agreement, stating that no delays can happen unless it’s absolutely necessary.”

If the homebuyer had failed to perform their due diligence and close on time, the seller could have argued that they breached the contract.

Delays in a home closing, even those that seem minor, can raise concerns from the seller and jeopardize a sale. This is why staying organized and proactive as a buyer is essential. 

What buyers should also consider

Due diligence isn’t limited to inspections and paperwork. It’s also the time to learn what isn’t being seen, even after multiple home tours. So don’t forget to research the neighborhood. Look into local school ratings. Get a home insurance quote. Review HOA rules if there are any.

“In my mind, due diligence means doing all the homework in anticipation of an offer—not just what’s presented by the seller, but what’s missing,” said Ying He, founder of YingHeHomes.com in San Francisco, Calif.

Why it’s worth being thorough

The due diligence phase of the homebuying process can feel technical. But it serves a simple purpose: making sure the home you’re buying is the right fit—without unwelcome surprises.

As Chantay Bridges, a senior real estate specialist at Los Angeles’ eXp Realty, put it: “Don’t guess about a property, research it. Don’t assume, verify. Don’t wonder, get answers.”

Due diligence won’t stop you from buying a home. It will help you buy the right one on terms that make sense for you.