Buyers Duty of Due Diligence
I may not be the first to crawl under your home, but I can provide you with the name of many people who will!
And i’ll be there to cheer them on.
What Is a Home Buyer’s Duty of Due Diligence?
Buying a home is one of the biggest financial decisions you’ll ever make. It’s exciting, but also a little intimidating, and a lot of buyers enter into the process with assumptions they’ve picked up from friends and media. One common mis-conception is that everything a buyer needs to know about the house has to be disclosed by the seller.
In Washington State, sellers of improved residential property are generally required to provide a Seller Disclosure Statement (Form 17) that discloses known, material defects affecting the property’s condition, systems, title, or environmental issues. HOwever, these statements, are subjective, based only on what the seller actually knows, and sellers are not required to investigate, guess, or disclose cosmetic issues, minor wear and tear, or “stigmatized” events like deaths or neighborhood reputation. And their disclosure is not a warranty and doesn’t replace buyer inspections.
In fact, most buyers don’t realize that in Washington real estate transactions, the primary responsibility for evaluating a property ultimately rests with the buyer.
Why It Matters
Once you sign the closing document, the house (and any problems that pop up) become yours.
Buyers are expected to actively protect their own interests by conducting thorough due diligence, which may include professional inspections, reviewing permits and public records, evaluating HOA documents, and investigating anything material to their intended use of the property. If a dispute were ever reviewed in court, a key question would be whether the buyer took reasonable steps to investigate the property rather than relying solely on the seller’s disclosures. For that reason, due diligence is not just a good idea, it is a critical part of the buyer’s obligation in the transaction and should be taken seriously when considering any home for sale.
Key Parts of the Due Diligence Process
Here are some of the critical things you should consider as part of your due diligence.
1. Hire a Professional Home Inspector
A licensed home inspector will evaluate the property’s condition, checking the condition of systems in the home like the roof, windows, HVAC and the foundation. They look for things like:
Structural damage
Electrical or plumbing issues
Signs of mold or pest infestation
Roof leaks or HVAC problems
Once you get the inspection report, you may be able to ask the seller to make repairs or negiotiate a lower price, depending on your offer structure and competition.
2. Review Disclosures
Sellers are required to disclose known material issues with the home. Read the document carefully, but also keep in mind that a seller only has to disclose things they know about, and some of the questions are subjective. If anything is unclear or you aren’t sure what their answer means, it can be an option to ask for clarification from the seller, or hire an inspector or specialist for their professional opinion.
3. Look Into Zoning and Restrictions
Are you dreaming of adding a guest house someday? Planning to rent out the basement? Make sure local zoning laws or homeowners’ association (HOA) rules don’t stand in your way.
4. Order a Title Search/review the seller provided Title report
A title company will verify that the seller legally owns the property and that there are no outstanding liens or legal claims. This is critical to ensuring you’re buying a home with a clean title.
5. Understand the Neighborhood
Take time to explore the area during different times of day. Look into school ratings, crime stats, future development plans, and commute times. You’re not just buying a house—you’re buying into a community.
6. Review the Seller’s Property Tax History
Knowing the property’s tax history can help you estimate your future tax bills. A sudden increase in assessed value could be a red flag.
Common Mistakes to Avoid
Skipping the inspection to save time or money – This can cost you big later.
Not reading the fine print – Whether it’s the HOA rules or the mortgage contract, details matter.
Letting emotions lead – It’s easy to fall in love with a home and ignore warning signs. Be smart, not just sentimental.
Final Thoughts
Your duty of due diligence isn’t just a checkbox, it’s a crucial step that can save you from major headaches and possible expenses down the road. Take the time, ask the hard questions, and surround yourself with a good team of professionals. It’s your right, and your responsibility, to know what you’re buying.
A good buyer’s agent will help you navigate the due diligence period with checklists, references to inspectors or other professionals, coaching on timing and prioritization of which elements are most critical to look into given your goals and when offers are due, and help you interpret the findings of any professional report.
