Your Due Diligence Toolbox
If you want to avoid any surprises the day after you close on a piece of property, then due diligence is highly important. Simply put, due diligence is examining and investigating that many different details that are a part of a potential investment. Doing this extensive investigation will allow you to get a better idea of what you are getting into and will let you see whether or not this investment is for you. Before you even make an offer on a piece of property, you should be starting this process, but after the offer is made you can make provisions that will allow you to look over important documents and have inspections done before you actually close on the property. It can be very difficult to get all the information you need during the due diligence process, and unfortunately may buyers are not prepared for this process. Buyers who are not adequately prepared usually end up bailing out on the deal or trying to get a settlement. Knowing where to look for the information you need is important for you to be successful at this process. The following is a list of helpful resources for you to add to your due diligence toolbox so your due diligence process will not end in disaster.
Ownership Data If you want ownership data, one of the best places to start looking is at the local courthouse. Recorded documents such as deeds, liens, subdivision plans, and easements are usually kept up by the government. As a general rule you will be able to find this data at the courthouse, and usually they will be found in the Tax Assessment Department or the Recorder of Deeds Department. If you are not able to go to the courthouse for the information, there are a variety of online databases that may be able to provide you with the information you need, such as www.realquest.com and www.searchsystems.net . It is important to keep in mind that unless it comes directly from the courthouse, there could be problems with the accuracy of the data.
New Construction Communities You may also want to find out who the builders are in your specific area. There are a couple ways that you can obtain this information. You can go to the land development or code enforcement offices of the municipality and get a list of approved developments and subdivisions. Another option to find out this information is to go out and visit the construction sites yourself. At the sites you can speak with the construction agents and pick up brochures on the builders.
Municipal Records Municipal records can be a great help to you, but you need to develop a list of the properties you are interested in for further investigation. After you have your list you can then make an appointment at your local municipal building to review development plans and files that are available. This type of information is available to the public, and you can review material from municipal meetings relating to actions taken by the municipality.
Utility Maps Having utility maps can prove helpful when you are going through the due diligence process as well. If you want to acquire these maps you may need to check out the mapping that is available from the water and sewer authorities in the region. Private water companies may be able to help you find these maps, or you could even try to get them from the county planning commission as well.
Zoning Zoning information can be difficult since the zoning properties are different everywhere you go. You will want to find out zoning information in the area you are interested in. You can contact the zoning officer at the local municipal office for information on zoning, or you may be able to find it through private vendors as well. Once you have this information, it is important that you read through each ordinance and not just the zoning classifications. There can be important information that is hidden within the ordinances that you need to know, so read it thoroughly.
Proposed Highways and Facilities When going through the due diligence process, it is helpful to know about proposed highways and facilities. If you need this type of information, the best place to check is with the local municipality, or through the regional planning commission or the county planning commission.
Floodplain Maps When you are considering a piece of property it can be very helpful to know whether or not that property is located in a flood zone. If you need floodplain maps of the area you can check with the local municipality or you can go online to www.FEMA.gov to find the information as well. If the land you are investigating is subject to any flooding you will be able to see this by looking at these maps.
Whether you are going to close on a small single piece of real estate, or you are working on a larger deal, due diligence is extremely important to the entire process. If there are any problems, due diligence will give you the opportunity to get a better deal on the piece of real estate, to have problems dealt with, or to walk away from the deal if that is necessary. Do yourself a favor and keep these due diligence tools in mind and use them to their fullest potential to prevent any real estate disasters and buyers regrets.
About the Author
Tony Seruga, Yolanda Seruga and Yolanda Bishop of http://www.maverickrei.com specialize in commercial and investment real estate. As of May, 2006, they and their partners are managing over $600 million dollars worth of new projects.
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