Right now we’re going to talk about due diligence in real estate. Thanks for tuning into the Real Estate Today podcast.
I’m Bob Nelson, real estate investment broker with Pacwest Real Estate Investments. And I’m Marcia Edwards residential broker with Windermere Real Estate.
Marcia: We want to talk a little bit about how you make sure you’re not buying a lemon before you own it. Taking a look at what you’re buying and how to do that in a way where you don’t have to be thinking of everything but you’ve got the right people beside you.
Bob: Well here’s the problem. Particularly in my field in investment real estate we do not allow a perspective buyer to go through occupied units and just try to figure out if they like it or not. I insist on an offer prior to the time that I would allow tenant spaces to be interfered with bottom line…
Marcia: Well that’s a big impact on the bottom line in loss of tenants…
Bob: Absolutely. So I’ve got to protect the tenants, residents in the property. So unfortunately you’ve made an offer and you’ve only seen the outside so you gotta be able to take a look at the inside, figure out if the bones of the building are good. Figure out if the tenancy is right et cetera, et cetera, et cetera for your game plan.
Marcia: So that’s the first point I think is, do you do the due diligence prior to the offer during the pending sale period or once you own the property. I would say prior to the offer there are some things you do want to understand. The basics of it, you want to make sure you have the information that the listing agent has available to you to make sure you understand the opportunity in order to price your offer.
Bob: And frankly if you are a buyer not represented by a broker, good luck. You need to know what to do. Now the broker that would represent you as a buyer’s broker is going to know what to at least ask for and once received, they’re going to be able to take a look at it and say yeah this is pretty good or this isn’t very good at all.
Marcia: That’s right, now that would be a quick look, glance almost in residential real estate. You better make sure that what you’ve got there is an opportunity that looks good and know that after its pending sale, after the other buyers have been eliminated because you got the offer and the opportunity in front of you, you take the second level, a better and closer look with due diligence.
Bob: You have to do this fairly promptly because if you don’t, if you drag your feet as a buyer during this due diligence period, the seller’s going to assume you’re out trying to shop for other things. They’re going to lose faith in you as being a buyer then if you see something and need to have a price adjustment or some form of concession, they’re not going to like that very much.
Marcia: I think the big take away here is have someone that’s done it before by your side during this process asa buyer. I’m Marcia Edwards, Windermere Real Estate.
Bob: And 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.