What does "due diligence" typically involve in real estate?

Due diligence in real estate refers to the comprehensive process of investigating and assessing all relevant details about a property before completing a transaction. This typically involves a thorough examination of various factors, including the property’s condition, title issues, zoning, environmental factors, and market valuation. The aim is to uncover any potential risks or liabilities that could impact the investment.

The process goes beyond merely acquiring permits or relying on the seller's disclosures. While permits may be part of due diligence, they represent only one aspect of a much broader investigative effort. Relying solely on the seller's disclosures can be risky, as they may not provide a complete picture of the property's status or any existing issues. Similarly, limiting research to just the property history neglects other critical components like current market conditions and potential future developments impacting value. Thus, the comprehensive nature of due diligence is essential to ensure informed decision-making in real estate transactions.