In commercial real estate brokerage today some properties have issues of concern that could impact buyers or tenants in the sale or leasing process. A due diligence process is required by brokers and agents to cover off on all the property issues before any marketing campaign commences.
The owner of the property can deliberately be selective on how much information they share about the property at the time of listing; that then leaves the broker at risk of litigation and dispute.
It is up to the agent or the broker to delve completely and thoroughly into the facts of the listing and the property location. Quality questions and a comprehensive knowledge of the local area will help identify concerning facts and problems about a property or a location. If an agent specializes in a property type, it is easier to delve and question property issues.
Question and Explore Property Facts
So it is a fact that every property should be comprehensively checked prior to listing and if any factors of doubt exist on details and facts, then the marketing of the listing should be withheld until all matters are understood. Don’t promote or inspect a property without having all the right information.
So what should be looked for? Every property is different, so getting to the main facts and concerns can be a challenge; experience helps. The agent or the broker should be looking for any issues that could complicate or derail the marketing campaign, future inspections, negotiations, property legality, documentation, or the conveyance.
I go back to the point that the client or property owner may not disclose all property details or provide all the correct information. Ask the right questions. Make plenty of notes.
Checklist of Property Issues
Here are some of the bigger ideas to consider and question as part of that property listing approach. You can add to the list based on your location and the special factors of property in your town or city:
- Boundaries – Are the fences and boundaries well defined? Are they on the correct line?
- Legal title – The owners of the property should have the legal right to deal with property issues. All documentation should support that.
- Property compliance to codes – The building control authority may have issued notices about the property. The property owner should know about those things and provide relevant information. If there is any doubt then do a property search at the building control office.
- Recent enquiries through other agents – If the property has been on the market before, or if other agents have taken people through the building or land, then you should know about it. Prices and marketing strategies from the previous promotions may complicate the marketing of the property today.
- Heritage or native title claims issues – Whilst not applying to every property or parcel of land, heritage and native title claims or involvement can complicate a sale or lease situation. Ask the questions and explore the issues.
- Environmental orders or notices – Perhaps an issue that is more common with industrial property, the environmental orders and notices may require satisfaction.
- Rental or lease documentation – Check the tenant mix against the property configuration and tenants in occupancy. View the property and ask questions.
- Tenant negotiations – With any larger property there are likely to be existing tenant and lease negotiations underway. If the property is coming up for sale, it is better to resolve outstanding negotiations before they delay any marketing of due diligence process.
- Improvements in the property – Are all the improvements in the property approved? Do they comply with current and relevant codes? Also ask about any factors of risk and liability. Also ask about maintenance issues that may be active or outstanding.