REALTOR® Magazine Online: Exercising Due Diligence for the Buyers

YOUR INTERACTIVE MAGAZINE

REALTOR.ORG/realtormag
.

Fifteen Benefits of
Working with a
Buyer’s Representative
  Advanced tip

Understanding Agency
  Broker tip

Contract Terms for Buyer’s Representatives

Qualifying the Buyer
  Advanced tip

How Well Do You Listen?
  Advanced tip

Who Are Today’s Buyers?   Advanced tip

Advanced: Psychographics
—Understanding
Buyer Motivation

Prospecting for Buyers

Working with
Internet-Empowered
Buyers

Servicing the Buyer
  Advanced tips

Closing the Deal
  Advanced tip

Due Diligence and Disclosure
  Advanced tip

Staying Safe While Showing Homes
  Broker tip

When to Call It Quits

Quiz: Buyer’s Representation

Bright Ideas: Working With Buyers

Code of Ethics: Working with Buyers

More Resources: Working with Buyers

Vendor Resources: Working with Buyers

DUE DILIGENCE AND DISCLOSURE

Due diligence is the reasonable effort to provide accurate and complete information about a property.

Exercising Due Diligence for the Buyers

Exercise “reasonable care” on behalf of the buyer to secure accurate information. That is, take all actions that an informed professional would be expected to perform. For example, it would be reasonable to assume that a trained real estate professional would know that properties built before the early 1980's might have asbestos insulation. In this case, exercising reasonable care would be advising the buyers to have an environmental inspection to ensure that the asbestos wasn't deteriorating.

Keep careful records of the transactions including information the property, offers, and counteroffers, and any instructions from your clients. Retain them as long as your state law requires.

The 5 Most Common Hidden Defects in Real Property

1. Bad foundation.
2. Worn roof.
3. Poor water drainage.
4. Termite infestation.
5. Inadequate systems, such as wiring, plumbing, or HVAC.
—Courtesy of trainer Kim Daugherty, Gundaker Realty, Maryland Heights, Mo.

TIP: Some states and many lenders require termite inspections, especially in states where termites are particular problems.

Latent Defects Not to Overlook

Future surrounding land use.
Insects.
Mineral right ownership.
Easements and land leases.
Fire protection (volunteer or professional).
County tax deferral.
Beach erosion.
Water quality—potability if a well is used.
Evacuation routes.
Parking availability.
Special condominium assessments, if applicable.
Percolation tests, especially if not connected to sewers.
—Adapted from “The Out-of-Towners,” by Marcie Roggow, ABR^®and buyer’s representative trainer for Hegg Companies, Sioux Falls, S.D., in Today’s Buyer’s Representative.

Due Diligence and Disclosure, next page >

Keep It Ethical
You aren’t obligated to discover every adverse factor with a property, just those that would be reasonably apparent to a real estate professional. Standard of Practice 2-1

Keep It Ethical
Do not try to provide specialized services to clients that are outside your areas of expertise.
Article 11

Copyright THE NATIONAL ASSOCIATION OF REALTORS® | Headquarters: 430 N. Michigan Ave., Chicago, IL 60611 |
DC Office: 500 New Jersey Ave. NW, Washington, DC 20001 | 1 800 874 6500