When embarking on the journey of purchasing a home, one of the crucial steps that prospective buyers must undertake is due diligence. Due diligence is the process of investigating, evaluating, and verifying information related to a property before finalising the purchase. It is an essential aspect of the home buying process, as it helps buyers make informed decisions and avoid potential issues down the line. Here are some key areas to focus on during the due diligence process:
Building Inspection: One of the key components of due diligence in a home purchase is conducting a thorough inspection of the property, regardless of how old it is. This involves hiring a qualified building inspector to assess the condition of the property, including its structural integrity and any potential issues such as mould or pest infestations. The inspection report can provide valuable insights into the overall condition of the property and help buyers identify any necessary repairs or renovations that may be required. Obtaining a Toxicology Report is also highly recommended.
Title and Land Information Memorandum (LIM): In addition to a physical inspection, due diligence also involves reviewing the property’s title and LIM. Reviewing the title will allow you to understand if there are any rights and/or restrictions applicable to the property. The title also confirms if the property is leasehold, cross-lease, leasehold, fee simple or unit title.
A LIM report holds valuable information about the property. It can include information about zoning regulations and any potential hazards including if the property is susceptible to flooding or erosion. The LIM will also note any building and resource consents that relate to the property. This is particularly important if the property has been renovated.
Finance and Insurance: If you need to obtain finance for the purchase, it is crucial that you have finance approved prior to confirming the purchase. Your lender will want to know details about the property to ensure it meets their criteria. A condition of obtaining finance will be that the property needs to be insured.
Ultimately, due diligence in a home purchase is about arming yourself with the information and knowledge needed to make a confident and informed decision. By taking the time to thoroughly investigate all aspects of a property before committing to a purchase, you can minimise the risk of encountering unexpected issues and ensure that you are making a sound investment in your future home. It is a critical step in the home buying process that should not be overlooked.
If you are looking at purchasing a property, Corcoran French have a dedicated team who are experts in this area and are here to assist.