What is Property Due Diligence?

Purchasing a property is not an easy task to do as it involves time-consuming processes and a tedious and meticulous checking of paper works. Only a few people have ideas on exactly what to do. You’ll hear experts say to make sure that you “do your due diligence” when buying a property. But what does due diligence really means? Why is it so important?

Due Diligence is the period of time between a property offer being accepted and the closing of the sale. Since the property is often a big investment, you don’t want to risk something without being meticulous about it. Whether you are buying a property for a single-family home or a property for business, it is important that you do your due diligence. This your time to review every aspect of the property you are buying. This means taking caution, performing calculations, reviewing of documents, talking with insurance companies, a physical inspection of the property, etc. If you think it is too much of a risk or there are several things that didn’t meet your expectations, then you can cancel the purchase and start looking for another property.

Usually, due diligence takes 10 – 45 weeks for a single-family house and 3 to 5 months for commercial property or even longer. It is the time you verify everything. Did everything that broker said or the seller said is true. You need to dive in into all the numbers and the conditions of the property and make sure that everything is exactly the way you expect them to be.

1. Inspect the property you are buying.

For example, when you’re buying a residential property, you want to check certain things. Of course, you have to do a physical inspection of the property. Does it have access to the main road? Is the location near the supermarket? Are there any schools nearby? Do they have access to electricity, the internet, potable water or even cable channels provider? This is a very tedious job and more often than not, only a few people know how to go through about this. You may need to hire a professional home inspector to walk through everything to determine if there’s something bad about the condition of the property or something is missing. These people are trained to do these. At the end of the inspection, they will give you a long checklist of everything you need to do with the property.

2. Check the title and public records.

Also, during this period, you need to look at the title is clear. When you buy a property, your name goes unto to the record and the next person who buys after you did and the next. So on and so forth. All names go down to the public record. What you want to make sure is that nobody has a legal claim to the property. You should be the only one who has a legal claim to the property. You don’t want to this on your own considering the hassle that you have to go thru. You can hire a land/property title service company or you may hire a lawyer. This will help you see if there are some issues that should concern you. Talk to the title insurance company agent and lawyer to help you review the documents.

3. Check the marketplace and other properties.

Make sure you know what the market has to offer. Too many people look at just a few properties, put in an offer and purchase. You should spend several months looking at properties before you buy.

4. Verify your investment.

During this period you need also to verify things like if you are buying a rental property you need to know how much the rent really is. You may want to talk to the tenant to make sure that the rental amount is really what the owner said it was. You want to verify the expenses. You need to know that if you rent it out again, you should be earning money rather than losing.

5. Look at the plat of the property.

A plat is drawn to scale and shows the land's size, boundary locations, nearby streets, flood zones, and any easements or rights of way. A plat map is required if a piece of land is to be subdivided into lots for building homes or if the land is to be made into a public-access location, like a park. Look at the plat of the property, have the easements plotted by title and walk the property for encumbrances.

6. Cancellation or renegotiations happen.

If you find something that didn’t meet your expectations, usually if you put it in a right clause of your contract, you can back out of the deal of the property or you can renegotiate the contract with the seller. Let’s be honest, the first time you look at the property, you don’t spend hours and hours going through every single piece or part of the property. Due diligence is designed for this – to make sure you know what you are really buying.

These are a few of the things you need to do when doing your due diligence when buying a property. Make sure that you have done this before closing the deal. If you fail to do the recommended tasks, problems might arise which might cause you to lose the money you have invested. Although these tasks will eat a lot of your time, they are all worthwhile. It is recommended though that you seek the assistance of real estate agencies, land title services companies or the likes to help you with your due diligence. It’ll be money well spent.

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Below is the complete list of CG Garcia Appraisal and Land Title Services

Title Management

  • Land Title Transfer
  • Due Diligence
  • Consolidation/ Subdivision of Title
  • Registration/ Cancellation of Mortgage
  • Reconstitution of Lost Title
  • Amendment of Technical Description of Title
  • Cancellation of Annotation on Title

Record Management

  • Assist in the Assessment and Payment of Real Property Taxes
  • Land Conversion

Land Survey


  • Title and Tax Declaration Verification
  • Traceback of Ownership/ Due Diligence
  • Verification of Technical Description of Title

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