Overview

Property due diligence is an investigation process of the property. This process is conducted by investors or buyers before they purchase a property. It involves the scrutiny of property condition, financial records, legal documentation, and market analysis to reduce risks and decide judiciously. Buying a property is a big financial investment that requires due diligence of the property. It is done to confirm genuineness and authenticity of the property. Legal permits and compliance are parts of real estate due diligence, so checking previous ownership documents, sales deed, RERA approval, etc. holds great importance. We at Your Property Doctor can help you understand your property’s value, prospects and potential challenges.

How is Property Due Diligence Conducted?

Initial Research This is about collecting the preliminary information about the property you are going to buy—ownership details, history, and market value of the property.

Hire the Right Professionals Hire the right professionals, who can do due diligence process of your property properly. For this purpose, you may hire lawyers, real estate consultants, and inspectors. With their specialized knowledge, they will unveil potential issues, related to the property.

Review Reports and Findings Review all the reports and findings—legal documents, inspection reports, and appraisal values—to understand the property’s condition and legal standing. Remember that each report will help you see the complete scenario before you take a decision.

Taking an Informed Decision Ensure whether the reports and findings are in alignment with your expectations and goals and then take a decision wisely in regard to your investment.  

What are the Key Components of Real Estate Due Diligence?

Property Inspection

Property Inspection ensures that you know the condition of the property before buying it. It will also help you know the issues that could lead to costly repairs and health hazards. It has the following processes:

• Physical Inspection: This process assesses various parts of the property— the foundation, plumbing, roofing, and electrical work.  

• Pest and Environmental Inspections: These processes uncover the hidden issues—mold or termite infestation, which could otherwise pose serious health hazards. Environmental checks assess soil contamination that could affect the value of your property.  

Legal Due Diligence

In real estate transactions, legal due diligence helps you avoid legal complications and enable you to have a smooth purchase. It includes the following processes:

Review of Contracts and Agreements: This process includes checking of necessary approvals, encumbrance certificates, and permits to confirm the legal standing of the property.  

• Title Deed: This reveals the authenticity of the property. According to this deed, the seller can sell property on legal grounds, and it has no encumbrances, liens, or unpaid dues. So, property title check is an indispensable part of transaction.  

• Zoning Regulations: These regulations prove that the property is located within the correct zoning category and follow the local laws.  

Financial Due Diligence

When due diligence process is being conducted, consider the various factors—verification of financial records, valuation and market analysis, and assessment of property taxes.