In real estate, what does "due diligence" typically refer to?

"Due diligence" in real estate typically refers to conducting a thorough investigation before a transaction. This process involves a comprehensive analysis of the property, including its physical condition, legal status, financial performance, and market analysis. The goal of due diligence is to uncover any potential issues or risks associated with the property that may influence the buyer's decision or the terms of the transaction.

During due diligence, buyers often examine property records, conduct inspections, review zoning and land use regulations, assess environmental risks, and verify financial statements. This careful investigation helps ensure that buyers make informed decisions and protect their interests.

While assessing the best property for investment, reviewing financing options, and negotiating terms of sale are all important aspects of real estate transactions, they do not encompass the full scope of due diligence, which is specifically focused on the in-depth examination of a property or deal before finalizing the transaction.