Property Due Diligence
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 process is all about minimizing risks.
Real Estate Due Diligence: 10 Steps to Take Before You Buy a Property
- Do a title review
- Conduct a thorough physical inspection
- 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.
- Run a value projection.
- Assess the location.
- Make sure there’s adequate parking.
- Analyze any Home Owners Association (HOA) rules which may include Architectural controls, Lawn and holiday decoration restrictions, Home maintenance standards, Noise complaint policies, Home occupancy limits, parking rules and guidelines, Pet size and quantity limits, Short-term rental restrictions and construction restrictions/limits among others.
- Review environmental issues.
- Collect repair estimates.
- Conduct a property appraisal.