What is due diligence in real estate transactions?

Due diligence in real estate transactions refers to the process of investigating a property before making a purchase. This investigation includes a thorough review of various aspects of the property, such as legal status, physical condition, zoning regulations, and potential issues that could affect ownership or value.

By conducting due diligence, a buyer aims to uncover any potential problems or liabilities associated with the property, helping them make informed decisions about their investment. This process is essential for mitigating risks, securing financing, and ultimately ensuring that the buyer is making a sound investment.

In contrast, the other options do not accurately capture the essence of due diligence. Final negotiations before closing focus on the terms of the sale, agreement on property pricing pertains to the financial aspects of the transaction, and documentation required for financing relates to the paperwork necessary to secure a loan. These aspects are important, but they do not encompass the comprehensive investigative nature of due diligence in the context of real estate transactions.