In commercial real estate agency you will inspect many properties in a given week. Many of those properties could very well become listings. Asking the right questions in the inspection process and doing your own ‘checks and balances’ will help you to get to the bottom of the key issues that could impact the listing and marketing process. Start the inspection process with a curious mind. Ask questions and take plenty of notes.
It should be said that many property owners and landlords do not know everything in or about property function and detail; they can also forget or fail to tell us the things that really matter when it comes to selling or leasing their property. For that reason it is essential that we do our own research on the property listing before it hits the market.
A ‘due diligence’ process at a later time will invariably find hidden property problems before settlement and when that happens it can be a ‘deal breaker’. It is better to be ahead of the problems and challenges that any property presents to you, so the parties are fully informed and briefed as part of the negotiation. To help with this I like the ‘checklist’ process. You can have a ‘checklist’ for each property type. You can add to and refine the checklist over time to improve its use.
Here are some items to help you start an inspection checklist for the sale process of an investment property:
- A title search and ownership check will let you know the property description and verify that you are talking with the real owner of the property.
- Get a history of the property as it is today and has been in the past. Ask questions about that history because any buyers will want to know about it.
- Check out the plans and drawings that impact the property location and improvements. Make sure those plans reflect the property as you see it and understand it.
- Look for rights of way, easements, encumbrances, and other issues that could impact the property use or title. If such things exist get copies of the relevant supporting documents and check them through.
- Ask about any unsatisfied orders or notices that could impact the use of the property.
- Check out the legality and use of the improvements of the property. The permitted use of the property on the lease should comply with the zoning for the approved construction.
- Do a plan search to ensure that the property complies with zoning regulations for its location. As part of that process make sure that the boundaries of the property comply with the placement of the improvement and the fence alignments. When in doubt get the property owner to do a survey plan check and supply you with the details and results.
- Check out the tenant mix and the leases that apply. Ensure that those leases are up to date and that the recovered and charged rental is in agreement with the lease documentation.
- Look for any matters of risk that can impact property use and access by tenants or visitors to the property.
- Make sure that all tenancy matters are up to date and that no tenant disputes exist that could impact the marketing and negotiation processes for the property.
So this is a good list to start with. You can add to it based on your location and the property type.