Due Diligence: A Comprehensive Guide for Buyers in Arizona

What is Due Diligence?

Due diligence is an important process that occurs during the escrow period of a real estate transaction in Arizona. It involves thoroughly reviewing and verifying all aspects of the property and the terms of the sale to ensure that everything is in order and that the transaction is fair and legal. This process is essential to protecting the interests of both the buyer and the seller and helping to ensure a smooth and successful transaction.

What’s involved during Due Diligence?

• Buyer should conduct a thorough inspection of the property to identify any issues or problems that may impact the value or condition of the property. This may include a physical inspection of the property, as well as a review of any relevant documents and records, such as building plans, zoning regulations, and environmental reports.  Inspections typically are estimated at $400-700 depending on the size and age of the property.

• Buyer should review all of the terms of the sale, including the purchase agreement, mortgage documents, and any other contracts or agreements related to the transaction. This will help to ensure that the terms of the sale are fair and reasonable, and that the buyer fully understands their rights and responsibilities under the terms of the sale.

• Buyer should also carefully review the property's title to ensure that it is free and clear of any encumbrances or liens. In Arizona this may involve working with the title company to conduct a title search and resolve any issues that may arise.

• Buyer should carefully review any disclosures provided by the seller, including any known defects or issues with the property. This will help to ensure that the buyer is fully informed about the condition of the property and can make an informed decision about whether to proceed with the transaction.

Overall, due diligence during escrow is an important process that helps to protect the interests of both the buyer and the seller in a real estate transaction. By thoroughly reviewing and verifying all aspects of the property and the terms of the sale, buyers can help to ensure that they are making a sound investment and that the transaction will be successful.

Due Diligence Period

The length of the due diligence period in Arizona can vary depending on the terms of the purchase agreement and the specific circumstances of the transaction. In general, the due diligence period is a specified period of time during which the buyer has the opportunity to review and verify various aspects of the property and the terms of the sale before committing to the transaction.  In the purchase contract it is 10 days from acceptance unless otherwise specified and negotiated depending on the complexity of the transaction and the amount of time the buyer needs to review all aspects of the property and the terms of the sale..

What if the buyer decides not to proceed with the transaction?

If the buyer decides not to proceed with the transaction, they may be able to terminate the agreement and receive a refund of their deposit, depending on the terms of the purchase agreement.