Today we’re wrapping up our three part series on due diligence. Thank you so much for tuning in to the Real Estate Today Podcast.
I’m Bob Nelson, real estate investment broker, with Pacwest Real Estate Investments. I’m Marcia Edwards, residential broker with Windermere Real Estate.
Marcia Edwards: We’ve been talking about due diligence, or the process of a buyer understanding and learning about the property they have put an offer in on. You want to make sure that you know what you’re purchasing before it’s yours, so that you know what you’ve got to handle and make sure that it’s adjusted for either in price, or accommodated and completed as a repair prior to your ownership.
Bob Nelson: Not just that, you also have to anticipate mortgage lending. How am I going to get that loan? If you’re not pre-approved before you make an offer, oh my gosh. That’s going to add a huge amount of time to your buying period, and the seller’s not going to like that. It’s frequent that I’ll ask for a preapproval commitment letter, to make sure that the buyer is qualified to borrow the amount of money they need to borrow in order to close the deal.
Marcia Edwards: The due diligence by the lender will be in the form of an appraisal. The appraiser will look at the title, and the status of the obligations, the property, make sure it’s got a healthy homeowner’s association attached to it, that everything is in good shape. For example, the roof, at least three years life remaining, as the appraiser views it. There is an inspection in due diligence. That lender’s appraiser is truly doing it to the benefit of the lender. You as a buyer, need to get your representation in there. But also, you’ll want to take a close look at what’s called the preliminary title report. That’s what’s attached and what you’re going to take ownership of, besides the subject property itself.
Bob Nelson: That preliminary title report is really critical. Look at it because you’re going to be given a brief period of time to study it. If you see something on the preliminary title report that you don’t like, easements across certain parts, where you say, wait a minute, I wanted to build something there. You better say something. If you make an objection during the complaint period, the seller now has an opportunity to either rectify the situation, or state, I can’t do it. Now, what do you want to do? You decide whether you want to move forward and buy it with those title issues in place, or if you simply want to spit the hook, and go after something different.
Marcia Edwards: This preliminary title report will show the status of the property, what obligations are there, what taxes you’re going to pay each year, if there’s a homeowner’s association, rules to the game like convenents, conditions, and restrictions to that neighborhood. It may attach something that’s odd, that says someone has some kind of right to the property, or use of the property. It’s definitely something that’s not interesting to look at, but vital and critical to review and get your realtor’s eyes on it as well.
I’m Marcia Edwards, Windermere Real Estate.
Bob Nelson: I’m Bob Nelson, real estate investment broker with Pacwest Real Estate Investments.
Join Bob Nelson and Marcia Edwards Eugene, Oregon, real estate experts daily at 5:30 on KPNW for the “Real Estate Today ” radio show.