Due Diligence: The Detective Work Nobody Tells You About

If you've ever sat in a real estate agent's office or spoken to a mortgage broker, you've probably heard the phrase 'due diligence' thrown around like it's common knowledge. Spoiler alert: it's not. And if you've nodded along while secretly wondering what on earth they're talking about, you're not alone.

What Is Due Diligence, Really?

Due diligence is essentially the detective work you do before making a significant financial decision. In the property world, it's the process of thoroughly investigating a property before you commit to buying it. Think of it as your personal investigation team, except you're the investigator and the property is the suspect.

The term comes from the legal world and literally means 'the care that a reasonable person exercises.' In plain English? It means doing your homework properly before signing on the dotted line.

Why Should You Care About Due Diligence?

Imagine buying a house only to discover it's built on a former landfill, or that the 'charming character' is actually just structural damage. Nightmare, right? Due diligence is your shield against these property horrors.

When you conduct proper due diligence, you're checking things like:

• Property inspections and building reports

• Title searches and legal documentation

• Pest and termite inspections

• Local council records and zoning information

• Neighbourhood research and future development plans

The Due Diligence Period: Your Window of Opportunity

In most property transactions, there's a specific timeframe called the 'due diligence period' (usually 7-14 days). This is your golden opportunity to investigate the property thoroughly. If you discover something dodgy during this time, you can often walk away from the deal without losing your deposit.

Miss this window? You might be stuck with a property that has more problems than a reality TV show.

Due Diligence Beyond Property

Financial planners and mortgage brokers also use the term 'due diligence' when they're checking your financial situation before recommending investments or loans. They're essentially ensuring you're a good fit for the product they're recommending.

The Bottom Line

Due diligence isn't fancy jargon designed to confuse you—it's simply a thorough investigation before making a big financial commitment. Whether you're buying property or investing, taking the time to do your due diligence could save you from expensive mistakes down the track.

So next time someone mentions due diligence, you can nod knowingly instead of nodding confusedly. You're welcome.

Disclaimer

This is general advice and not financial advice.