Due Diligence Playbook
A practical due-diligence sequence to reduce post-close surprises on 4-bed 3-bath homes.
Validate the House and the Deal
Due diligence includes both physical risk and contract risk.
Sequence
- Property condition assumptions
- Permit and repair history
- HOA and title document review
- Financing and appraisal alignment
- Closing-cost and reserve confirmation
Treat each stage as pass/fail. If unresolved high-cost risk remains, do not force the transaction.
1
Days 1–5: Property ConditionFull inspection + specialist follow-ups. Exit gate: no unresolved critical findings.
2
Days 1–7: Permit + Repair HistoryPull county permit records and disclosure supplements. Flag any unpermitted work.
3
Days 3–10: HOA + TitleFull HOA financials, CC&Rs, reserve study, and title commitment. No encumbrances.
4
Days 7–18: Financing + AppraisalAppraisal at or above offer price. Confirm gap coverage plan if needed.
5
Days 15–Close: Cost ConfirmationFinal CD vs Loan Estimate reconciliation. Confirm cash-to-close and wire instructions.
Due Diligence Checkpoint Schedule
| Stage | Typical Window | Key Deliverable | Exit Gate |
|---|---|---|---|
| Property condition | Days 1 – 5 | Inspection report + specialist quotes | No unresolved critical findings |
| Permit and repair history | Days 1 – 7 | Permit records, disclosure supplements | No hidden major system replacements |
| HOA and title review | Days 3 – 10 | HOA financials, CC&Rs, title commitment | No encumbrances or HOA red flags |
| Financing and appraisal | Days 7 – 18 | Appraisal at or above offer, clear-to-close | No appraisal gap above pre-committed coverage |
| Closing cost and reserve confirmation | Days 15 – close | Final CD reconciliation vs Loan Estimate | All lines match within RESPA tolerances |
Textbook Field Notes
Due Diligence Lab
Instructor Note: Due diligence includes both physical risk and contract risk. Buyers who run the inspection but skip title, HOA, and appraisal alignment face post-close surprises at a much higher rate. All five stages are required.
Breakout Exercise: 7-Day DD Sprint
On day 1 of the inspection period, assign a responsible person, a firm deadline, and a specific pass/fail definition to each of the five stages. Check in daily. Any stage that reaches its deadline with an unresolved critical risk immediately triggers a three-way conversation: credit negotiation, contingency extension, or exit. Do not let stages drift passively.
- Request permit history from the county recorder — unpermitted work discovered post-close becomes the buyer's liability.
- Review the full HOA financials, not just the rules — underfunded reserves are a future special-assessment risk.
- Confirm appraisal contingency language and your gap coverage plan before signing the purchase agreement.
Transaction Discipline: If financing or appraisal creates an unresolved gap with no pre-committed cash coverage plan, pause. Forced commitment at closing is far more expensive than renegotiation during the inspection period.
Helpful Resources
- DEKOPRO 208-Piece Home Tool Kit
- Inspection Flashlight Set
- Borescope Inspection Camera for Walls and Pipes
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