What does the term "due diligence" refer to in real estate?

The term "due diligence" in real estate refers to the thorough investigation and verification process that a buyer undertakes before finalizing a transaction. This process is critical as it enables the buyer to assess the financial aspects, legal issues, physical condition, and market value of the property. Due diligence typically includes reviewing property documents, inspecting the property, conducting title searches, and verifying zoning laws, among other tasks. This comprehensive examination helps potential buyers make informed decisions, ensuring they understand what they are purchasing and identifying any potential risks associated with the property. Engaging in due diligence protects the buyer's interests and can prevent future disputes or financial loss.