What Happens When You Buy a House Without Due Diligence?
Mon Feb 22, 2021 on Blog
Pandemic House Buy without Performing Due Diligence
Purchasing a home is one of the biggest decisions that many make considering the purchase price. Unlike buying goods at a store, houses are not returnable. As a result, one has many factors to consider before making a home purchase—and should not simply rush into such a purchase.
The Role of the Pandemic
Yet, this past year, millions of Americans rushed into purchasing their homes. Why? The pandemic created a housing frenzy, where people exited cities in search of more space, especially since many were and are able to work from home. This exodus, in turn, created bidding wars as housing inventory dropped as many homeowners were hesitant to list their properties during the pandemic. The result: Buyers had little to choose from and began to waive inspections or skip typical due diligence before purchasing a home.
Aside from purchasing homes without a professional inspection, insurance companies such as Chubb have seen non-weather related losses increase in frequency and severity due to hasty home purchases. Home purchasers are moving to places that they are unfamiliar and where they do not necessarily understand potential risks associated with a particular geographic location. Good examples may be floods caused by frozen pipes or air conditioners that freeze over. Alternatively, people overlook known risks in order to purchase homes before someone else does. Again, the notion of supply and demand coupled with the challenges that the pandemic has caused has led purchasers to take risks that they had not done previously.
Most resales are sold “as is” which means that it is incumbent upon a potential purchaser to make sure that inspections are done. Without doing the necessary due diligence, you literally agree to take the property as it is—even if there may be potential liens or mold. Your home is one of the most expensive purchases that you will make and taking your time to evaluate the condition of the property may be essential to that investment. Real estate business and law help secure the title of the property and helps give evidence of events in the history by title search or property title search.
From the Trenches