If you’re buying a home for the first time the due diligence period is one of the things most likely to catch you off guard. Understanding it before you go under contract can save you a lot of stress and potentially a lot of money.
Here’s what you actually need to know.
What is the due diligence period?
The due diligence period is a window of time after you go under contract during which you can investigate the property however you see fit and walk away from the deal for any reason at all without losing your earnest money.
That last part is important. During the due diligence period your exit is clean. You don’t have to cite a specific reason. You don’t have to prove anything is wrong with the house. If you decide for any reason that you don’t want to move forward, you can terminate and get your earnest money back.
Once that window closes it’s a different story.
How long is it?
The due diligence period is negotiable and gets written into the contract at the time of the offer. It typically runs between five and ten days depending on the situation and how competitive the offer needs to be. In a multiple offer situation sellers sometimes prefer a shorter due diligence period because it reduces their risk. As a buyer you want enough time to complete your inspections and review the results before the window closes.
What happens during due diligence
This is when you do your homework on the property. You’ll schedule your general home inspection, and depending on what the inspector finds you may bring in specialists for things like a sewer scope, radon test, HVAC inspection, or structural evaluation. You’ll also want to review the seller’s disclosure, look into HOA documents if applicable, and flag anything else that needs a closer look.
We always tell our buyers to use every day of the due diligence period. Don’t wait until day six to schedule your inspection. Get it done early so you have time to ask follow up questions, get repair estimates if needed, and make a fully informed decision before the clock runs out.
What happens after due diligence ends
Once the due diligence period closes your options narrow significantly. You can still terminate if you have a valid contingency, such as a financing contingency or an appraisal contingency, but you can no longer walk away simply because you changed your mind without putting your earnest money at risk.
This is why we take the due diligence period seriously on every transaction. It’s your protected window to make sure this is the right house for you. Use it well.
As Georgia Title and Escrow Co outlines in the standard Purchase and Sale Agreement, the due diligence period is one of the most important protections available to buyers. Understanding it before you make an offer puts you in a much stronger position.
If you’re a buyer getting ready to make an offer and want to make sure you fully understand what you’re signing, we would love to walk you through it.
The bottom line
The due diligence period is one of the strongest protections you have as a buyer. It gives you a clean exit window, time to investigate the property thoroughly, and the information you need to make a fully confident decision. Know how it works before you need it.