Due Diligence

Due diligence is the buyer's window of opportunity to thoroughly investigate a property they're under contract to purchase. This is when you hire a home inspector, possibly bring in specialists (like a structural engineer or roofer), review HOA documents, research the property title, and evaluate everything you need to know before committing to close.

The term is sometimes used interchangeably with the inspection period, though due diligence can be broader: it's the full scope of investigation, not just the physical inspection of the home.

In Tennessee, the standard purchase contract explicitly uses the term "due diligence period" to describe this window. In Alabama, the inspection contingency period serves a similar function. The terminology and mechanics can vary by contract and state, so your agent will explain exactly how it works in your specific transaction.

Due diligence is your main opportunity to learn the truth about a property before you own it. Discoveries made during due diligence can lead to renegotiation, requests for repairs, credits, or, if something significant and unexpected is found, the ability to exit the deal.

Skipping or rushing due diligence is one of the biggest mistakes a buyer can make. Problems that seem minor can turn into expensive repairs after closing if they weren't identified and addressed during the due diligence period.

A buyer goes under contract on a home. During the due diligence period, the home inspector finds that the crawl space has significant moisture damage and signs of past water intrusion. The buyer gets a remediation estimate and requests either a price reduction or a credit at closing. The seller agrees to a $4,500 credit. Both parties are satisfied and the deal closes.

"Due diligence is just the home inspection."

The home inspection is the most important part of due diligence, but not all of it. Buyers should also review any HOA rules and financials, research flood zone status, review the title history, verify property boundaries if relevant, and investigate any other concerns about the property. Your agent can help you understand what's worth investigating for your specific situation.