How to Research a Property's History with These Tips

Researching The Property You Want to Purchase is Crucial

When you are buying a home, it is essential to find out as much information on the property as you can. Sometimes the history of a house can be enshrouded with the deep mystery of even a troublesome past.

Of course, if a home has some negative history, it is possible it could impact the market value. If you believe in the paranormal or people dying in a home can come back to visit, all the more reason to do some research.

Sometimes a home's history is nothing out of the ordinary. That doesn't mean you shouldn't conduct some ordinary due diligence. Far from it.

It is always wise to look carefully at any property you are purchasing. Part of your due diligence should include hiring a professional home inspector. Your buyer's agent should also familiarize you with anything in the area which may cause concerns.

Let's look at some of the things you need to consider when researching the feasibility of purchasing a home you love.

Research on a Home Before Purchasing is CrucialPhoto byDeposit Photos

What is Due Diligence in Real Estate?

Due diligence is a set of actions and searches intended to assess the value and condition of the property.

If you are planning to purchase a home, it is essential to ensure that it is in good condition and does not require significant repairs.

One of the most critical steps to examining the property is hiring a professional home inspector to lookover the property for defects thoroughly.

A home inspection is a crucial step when buying a home. It is one of the most common contingencies found in real estate contracts, and for good reason.

When considering a property, it is essential to check for any property liens or title encumbrances. This research will protect you against unwanted expenses and problems.

Without doing proper due diligence on a home's history, you could find yourself in a financial nightmare you'll regret.

When Should Due Diligence Be Conducted?

There are typically at least two steps in this process. Basic research comes first, during which you narrow down your search to properties that fit your needs. This simple filtering method will result in a list of properties that may be of interest to you based on your investment goals.

In general, buyers focus on the financials, the property type, location, and other external factors.

However, getting a feel for a neighborhood, the relative value of properties and its proximity to critical amenities is worth taking some time.

While looking at homes, respecting the owner's property is essential, but you always want to be thorough in your investigations.

Make sure you look at every property with your eyes wide open. Looks for problems inside and out. Your eyes are the first step, and then it will fall to the professionals.

Your Inspection Contingency is a Key Part of Your Due Diligence

After you make an offer on a property, the next step is to conduct a more in-depth analysis. The due diligence process is a period of time, typically a fixed number of days, in which the buyer can inspect the property. This period is often referred to as the home inspection period in the purchase and sale agreement.

The buyer may cancel the agreement if any significant problems are discovered during the due diligence period.

Typically, the inspection period outlined in the purchase agreement is not that long. Sometimes to get an accurate picture of a property you may need more time. You may be researching some potential issues and waiting for responses from the professionals you've hired.

It could be as simple as having your real estate check to ensure no open permits at the town hall. On many occasions, a seller will have work that requires a building permit. They don't always get one when they are required to. You don't want it to become your problem.

One of the easiest parts of discovering a home's history is to make sure you have your buyer's agent ask a lot of question. Put together a list and get them answered to your satisfaction.

Have an Attorney Conduct Proper Research For You

If you are using a mortgage lender and getting financing, they are going to have either a title company or a real estate attorney conduct a title search.

The title search will be done to ensure there are no encumbrances on the property, such as unpaid liens. A real estate attorney does many things for a buyer in a real estate transaction, including protecting their interests.

It is always wise to hire one. Buying a home is probably one of the most significant financial investments you'll make in your lifetime.

Your real estate attorney will research things about the property you'll want to know about, such as whether there are any easements impacting the market value.

Look Over Financial Reports When Buying a Condominium or Townhouse

When you are purchasing a condo or townhouse, there will be an extra layer of due diligence. Conducting a financial forensic analysis of the property and association will be vital.

With a townhouse or condo, you buy into a community where everyone shares expenses. When some of the owners become delinquent, these financial problems can fall back onto the rest of the owners.

Some condo associations are well-managed and have plenty of money in the financial reserves to take care of the neighborhood. Unfortunately, others do not.

Looking over the financial statements to know what you're buying into is crucial. Sometimes significant financial expenditures are going to need to be made. A condo association could demand a special assessment from all the owners.

For example, all of the roofs of the units may need to be replaced, which will cost tens of thousands of dollars. As a new buyer, you could be buying into a financial headache.

Final Thoughts on Researching Homes Properly

Conducting thorough research on a home you intend to purchase is one of the smartest things you can do. Don't just focus on the home but the surroundings as well.

Make sure you look beyond the neighborhood. Is there something nearby that could impact your decision to purchase? Finding out after the fact won't be pleasant.