Property Due Diligence
Property Due Diligence is the process of appropriately evaluating, verifying and ascertaining the authenticity of the property ownership plus any possible encumbrances before purchase. Through this process, the potential property buy is looking for a comprehensive understanding the property’s true commercial potential and any risks involved in the purchase.
Due diligence is also investigation, audit, or review performed to confirm details and facts of a matter under consideration. In the financial world, due diligence requires an examination of financial records before entering into a proposed transaction with another party. Due diligence protects a prospective property buyer against purchasing a property that could have been acquired through fraudulent illegal or trespass to land
Due diligence in real estate entails the examination and scrutiny of every aspect of a property that could affect its appropriateness and/or value. Under this, buyers do their homework thoroughly before deciding to buy a property to minimize any possible risks. And to real estate professionals, this due diligence is all about minimizing risks.
Real Estate Due Diligence: 10 Steps to Take Before You Buy
- Do a title review
- Inspect the property thoroughly
- Consider the surrounding property and neighborhood
- Examine recent sales activity
- Review price trends
- Find out how many homes in the area are in foreclosure
- Look at the upside potential
- Go to open houses
- Research zoning requirements
- Check your liability insurance.