The buyer in a real estate transaction is always at a disadvantage. The seller possesses the property, and usually, all of the requisite information concerning same. More often than not, the buyer has little or no knowledge concerning the property, but must diligently investigate and inspect it or risk understanding, all too well, the still surviving doctrine) of “caveat emptor” (let the buyer beware).
Confirming what property is being received, what condition it is in, what can or cannot be done with the property, and what risks are inherent in its ownership are of critical importance, and warrant due diligence inspection rights in every contract to buy real estate.
Typically, title commitments/policies, surveys, environmental audits, zoning reviews, engineering and building condition reports, and financial and legal reviews are the required tools in any “diligence tool box”.
While certainly not a substitute for professional reports/reviews…there are a number of websites and places one can and should visit to get an early idea of the viability of a particular property and to identify any early warning signs:
Locating the Property- Thanks to “Mr. Google”, you don’t have to hire a pilot to get a decent aerial of a property any more. Just go to www.google.com/earth/index.html, download the program for free and get aerials, street views, 3D imagery and more. More detailed maps with parcel number overlays and other local information can be found on County GIS (Geographical Information System) Maps. Just log on to: www.caao.org/GIS/index.html for an index of all Ohio County Auditor/GIS websites (Note: not available in the following counties: Clinton, Erie, Morrow, Muskingum, Ottawa, Pickaway and Ross). A more direct access to Cuyahoga County’s GIS site is: www.gis.cuyahogacounty.us. Note that some sites will require specific browsers. For example, Cuyahoga’s GIS site requires Mozilla Firefox 3.5.2.
Environmental “Quick Check”- “Envirofacts” at www.epa.gov/enviro provides access to several US EPA databases that provide information about permits and environmental activities. Searches can be initiated by address, facility name, geographic location, classification and pollutant. While Ohio EPA’s databases are not as widely available, www.epa.ohio.gov/dhwm/info_resorces.aspx will let you determine what facilities are in the “Cessation of Regulated Operations (CRO) Program”. Log on to www.comm.ohio.gov/fire/bustMain.aspx and you can check the Bureau of Underground Storage Tank Regulations lists of regulated facilities and active releases.
County Auditor and Recorder Information- www.caao.org will take you to a list of all Ohio’s Counties, with links to their auditor websites. Current valuation (according to the County’s appraisers), taxes, permanent parcel numbers, GIS maps and more are available online and right at your fingertips. Pick up the phone, and you may also (depending on the county) be able to get a copy of the appraiser’s valuation card or full appraisal (called ‘industry report’ for commercial buildings in Cuyahoga County). www.ohiorecorders.com will give you a list of all Ohio’s Counties, with links to their recorder websites. Many of these sites allow you to enter a parcel number or owner’s name, and you can retrieve, on-line, copies of deeds, mortgages and other recorded documents. Some counties (e.g., Hamilton) will only produce an index of recorded documents, requiring you to send a check for a copy of a particular document.
City/Village/Township Information- Most cities/villages/townships have their own websites containing important information from demographics to zoning to codified ordinances. Many of these municipalities publish their ordinances on one of two websites: www.conwaygreene.com and www.amlegal.com. A call to a building/zoning department can usually direct you to zoning information, zoning maps, and answers to simple, but important information such as: “is the property at ___address currently zoned for retail establishments, such as a restaurant. www.city-data.com is another site you may find helpful to locate demographics and other facts about a particular municipality.
Valuation- While more reliable for residential (vs. commercial) real estate, www.zillow.com, www.trulia.com and http://realestate.yahoo.com are often utilized to get a good idea of values and comparable sales. www.loopnet.com is a great commercial real estate site to check asking prices, and what else is “out there” on the market.
General “let your fingers do the walking” Searches- Get lost in cyberspace and do a multitude of search combinations with different browsers, entering the facility name, address, owner’s name, tenants’ name…and you may uncover newspaper articles about a previous or current problem, a prospective two-year construction project, an expected new interchange or other valuable information.
Preliminary due diligence may indeed produce information that discourages a prospective purchaser. “That’s a good thing”, as the time, money and stress inherent in the real estate purchase/sale process can be avoided early on. Alternatively, information can be a good bargaining tool for the buyer, and help to allocate the risk and perhaps negotiate a better deal.
Preliminary due diligence, however, should not be solely relied upon as encouragement to proceed with a real estate purchase, without an extensive, professional, “post-contract” investigation and inspection (diligence) process. While “cash is king” these days, information is, has been and will always be “key” to minimizing real estate risk.
Confirming what property is being received, what condition it is in, what can or cannot be done with the property, and what risks are inherent in its ownership are of critical importance, and warrant due diligence inspection rights in every contract to buy real estate.
Typically, title commitments/policies, surveys, environmental audits, zoning reviews, engineering and building condition reports, and financial and legal reviews are the required tools in any “diligence tool box”.
While certainly not a substitute for professional reports/reviews…there are a number of websites and places one can and should visit to get an early idea of the viability of a particular property and to identify any early warning signs:
Locating the Property- Thanks to “Mr. Google”, you don’t have to hire a pilot to get a decent aerial of a property any more. Just go to www.google.com/earth/index.html, download the program for free and get aerials, street views, 3D imagery and more. More detailed maps with parcel number overlays and other local information can be found on County GIS (Geographical Information System) Maps. Just log on to: www.caao.org/GIS/index.html for an index of all Ohio County Auditor/GIS websites (Note: not available in the following counties: Clinton, Erie, Morrow, Muskingum, Ottawa, Pickaway and Ross). A more direct access to Cuyahoga County’s GIS site is: www.gis.cuyahogacounty.us. Note that some sites will require specific browsers. For example, Cuyahoga’s GIS site requires Mozilla Firefox 3.5.2.
Environmental “Quick Check”- “Envirofacts” at www.epa.gov/enviro provides access to several US EPA databases that provide information about permits and environmental activities. Searches can be initiated by address, facility name, geographic location, classification and pollutant. While Ohio EPA’s databases are not as widely available, www.epa.ohio.gov/dhwm/info_resorces.aspx will let you determine what facilities are in the “Cessation of Regulated Operations (CRO) Program”. Log on to www.comm.ohio.gov/fire/bustMain.aspx and you can check the Bureau of Underground Storage Tank Regulations lists of regulated facilities and active releases.
County Auditor and Recorder Information- www.caao.org will take you to a list of all Ohio’s Counties, with links to their auditor websites. Current valuation (according to the County’s appraisers), taxes, permanent parcel numbers, GIS maps and more are available online and right at your fingertips. Pick up the phone, and you may also (depending on the county) be able to get a copy of the appraiser’s valuation card or full appraisal (called ‘industry report’ for commercial buildings in Cuyahoga County). www.ohiorecorders.com will give you a list of all Ohio’s Counties, with links to their recorder websites. Many of these sites allow you to enter a parcel number or owner’s name, and you can retrieve, on-line, copies of deeds, mortgages and other recorded documents. Some counties (e.g., Hamilton) will only produce an index of recorded documents, requiring you to send a check for a copy of a particular document.
City/Village/Township Information- Most cities/villages/townships have their own websites containing important information from demographics to zoning to codified ordinances. Many of these municipalities publish their ordinances on one of two websites: www.conwaygreene.com and www.amlegal.com. A call to a building/zoning department can usually direct you to zoning information, zoning maps, and answers to simple, but important information such as: “is the property at ___address currently zoned for retail establishments, such as a restaurant. www.city-data.com is another site you may find helpful to locate demographics and other facts about a particular municipality.
Valuation- While more reliable for residential (vs. commercial) real estate, www.zillow.com, www.trulia.com and http://realestate.yahoo.com are often utilized to get a good idea of values and comparable sales. www.loopnet.com is a great commercial real estate site to check asking prices, and what else is “out there” on the market.
General “let your fingers do the walking” Searches- Get lost in cyberspace and do a multitude of search combinations with different browsers, entering the facility name, address, owner’s name, tenants’ name…and you may uncover newspaper articles about a previous or current problem, a prospective two-year construction project, an expected new interchange or other valuable information.
Preliminary due diligence may indeed produce information that discourages a prospective purchaser. “That’s a good thing”, as the time, money and stress inherent in the real estate purchase/sale process can be avoided early on. Alternatively, information can be a good bargaining tool for the buyer, and help to allocate the risk and perhaps negotiate a better deal.
Preliminary due diligence, however, should not be solely relied upon as encouragement to proceed with a real estate purchase, without an extensive, professional, “post-contract” investigation and inspection (diligence) process. While “cash is king” these days, information is, has been and will always be “key” to minimizing real estate risk.
1 comment :
Thank you so much for such simple yet practical low cost Due-Diligence tips whilst buying a property! :)
Cheers!
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