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Doing The Research = Due Diligence

Posted by Susanna Haynie on August 24, 2016
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Due Diligence before buying a house

When you are purchasing any property in Colorado, the state contract allows for several extensive time periods allowing you to do your “due diligence”.

Due diligence means that you will [have the time to] research every detail and facet of your real transaction you are about to close, to make sure that this is indeed what you want, expect or at least you KNOW what you are getting.

Agents are happy to provide resources to you, to do your research. However, working with a licensed real estate agent in a real estate transaction, does not relieve you as buyers and sellers from your fundamental responsibility to protect your own interest. Only YOU really know what you are looking for, and ONLY you can determine whether certain facts about a real property are acceptable to you or not.

You agent may not perform your due diligence for you. Your agent may only suggest sources where you can obtain the information or documents you seek…provided your agent has actual knowledge of where to obtain the information or documents. Ie. a real estate agent is not to blame if there is a huge sales center going to be built after you have purchased your new home, unless the agent was aware and did purposely NOT tell you. As a buyer, you should take all reasonable steps to determine the condition of the property you are planning on purchasing.

It, indeed, is your sole responsibility to perform whatever due diligence you deem necessary to independently verify any and all information in connection with the real estate transaction. Your Realtor will provide access to the property if necessary so that you have the opportunity to do all you need to do. You should seek professional advice in regard to any facet of the transaction you think are necessary and you should make your own inquiries to the appropriate government agencies, or by retaining your own professional service providers in regard to any and all matters that you as the buyer consider important in reaching a decision to purchase any real estate property, including but not limited to:

  • determining property values
  • setting the price you want to use in your offer to purchase
  • seeking legal or tax advice
  • checking for potential or actual issues involving
    • zoning,
    • land  planning,
    • availability of public facilities,
    • future road plans,
    • utilities,
    • master plans and searching public records or government agencies for documents such as plats, deeds,deed restrictions, Title Defectsland titles, Title Insurance Explainedseptic and well permits, building permits, airports or air strips in the region
    • use of adjacent or nearby properties
    • water testing
    • soil testing
    • environmental testing
    • Tips To Research A Colorado Springs Neighborhood
    • master plans and searching public records or government agencies for documents such as plats, deeds,deed restrictions, land titles, septic and well permits, building permits, zoning airports or air strips in the region
    • Environmental Hazards To Colorado Homes
    • contacting school officials to confirm school districts or school bus routes
    • check your insurance premium on the new property
    • is the house affected by any drug use or other previous use

If you are concerned about sex offenders or aledged criminals or convicted criminals being in the neighborhood or who may have an ownership interest in the property you’re considering if their presence is important to you in making a purchase decision about a particular property, then you must check the  appropriate sources to confirm these details. You should also use your own due diligence to read or review national or local news media sources to locate perpetrators and then cross reference on your own these names with any properties or neighborhoods you’re interested.

Don’t Go Without a Home Inspection When Purchasing a HomeDue Diligence before buying a house

For Colorado Springs/El Paso County:

  • ZONING: The present and future zoning and land use, laws and regulations affecting the Property, both immediate and surrounding. You can start here
  • SURVEY: Even if not required as a condition of financing or Title Insurance, it is recommended that you obtain a survey/ILC (Improvement Location Certificate) that at least describes the size and adequacy of the Property, identifying all survey/ILC markers, Property lines, structures on the Property, easements, encroachments, and rights of way. The survey must be ordered and reviewed prior to the “Survey Objection Deadline” described in Section 9.2 of the Purchase Contract. (Note) There are several types of surveys. It shall be Buyer’s responsibility to investigate and satisfy all questions as to the type of survey that best meets Buyer’s needs.
  • PROPERTY TAXES: The amount of real Property taxes due in the year this contract is executed and subsequent years. Lookup here.
  • AIR & AUTO TRAFFIC: The impact of air and auto traffic on the Property including aviation easements. Start here
  • SCHOOLS: The adequacy and availability, now and in the future, of the public or private schools in the Property’s neighborhood. Start here
  • FLOOD ZONE: Whether or not the Property is located within a flood hazard area as defined by the Flood Hazard Boundary Map published by the Federal Insurance Administration, which operates under the Flood Disaster Protection Act of 1973. In the event the Property is located within a flood hazard area, the Buyer is informed that lenders may require flood insurance and such insurance may be desired by the Buyer, if available. Is my home in a flood zone? Look here
  • MINERAL RIGHTS: Buyer understands that all or part of the mineral rights to the contemplated Property most likely have been conveyed to or reserved by a third party not in Title to the Property. The Buyer is informed that it should investigate and satisfy itself as to the impact said mineral rights may have on the Property. Buyer is informed that a Title Insurance Endorsement Form 100.30 is available at an additional cost to protect the Buyer in the event any party holding said mineral rights elects to exercise said mineral rights. Start here with your research
  • WATER RIGHTS: Well Permit Guide by Division of Water Resources
  • POLICE COMPLAINTS and OTHER ILLEGAL or CRIMINAL NEIGHBORHOOD ACTIVITY: Buyer is hereby advised that it should investigate with local police officials to determine if any criminal complaints have been made regarding the contemplated Property, its owners, occupants and its neighbors. Buyer should also determine whether law enforcement agencies suspect any illegal activity within the Property’s neighborhood. Start your research here

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