What does "due diligence" refer to in real estate transactions?

Due diligence in real estate transactions refers to the comprehensive process of thoroughly researching a property and its associated documents prior to finalizing a transaction. This entails investigating various aspects such as the property's condition, legal titles, zoning laws, and any potential liens or encumbrances. The due diligence process is crucial as it helps buyers uncover critical information that may influence their purchasing decisions, ensuring they are making an informed investment.

Additionally, while informing sellers about issues affecting their property is important in a real estate transaction, it doesn't capture the broad scope of due diligence, which is primarily the responsibilities of the buyer. Negotiating the price and verifying a buyer's financial capabilities are also essential components of a transaction, but they do not define due diligence, which chiefly focuses on the investigative aspect of the property itself.