Buying a property is a big decision. There are lots of things to consider before you sign on the dotted line. It is important to check if you are making a good investment or not.
The best way to ensure you are not wasting your money or saddling yourself with a lemon is to do your due diligence.
What does that involve?
Let’s take a look...
What is due diligence?
Firstly, let’s have a look at what due diligence actually is. Due diligence means researching and investigating before signing a contract. So in the case of a property, you would need to look into a lot of different matters to ensure you are spending your money wisely.
There are some formal checks that you can have done, but there is also informal research that you should undertake yourself. No one else will undertake these checks for you, so it’s your responsibility to try before you buy so to speak. There are a number of people that can help you out with the process - the team here at Planning Plus included.
Why do I need to do it?
Being thorough with your due diligence will mean that you know exactly what you are buying. That means you should do all of your checks before you put in an un-conditional offer or before it gets to auction day.
If you equip yourself with all the knowledge upfront then you will know all about the area, any issues with the property, understand any restrictions, the true value of the house, if you can afford it, and what it might cost to make any repairs.
What Is Involved?
Your due diligence should include:
Informal research: This is something you should do yourself before anything else. It includes researching the area, transport options, proximity to schools and facilities, the community feel, the traffic situation, and if the property has all of your must-haves.
Important documents: There are some legal document that you will want to check that give you vital information about the property.
The Certificate of Title details the legal description of the land, proves ownership, and shows if there are any restrictions on the site. This could include consent notices, easements and land covenants- you need to get copies of these and read them!
A LIM Report contains information from the local Council about the property - about rates, land features, stormwater, sewage, or building and planning consents.
A Property File is another Council document that shows any changes made to the property since being built. This would usually include building and resource consents granted. You need to check this to ensure that what’s on the site is legally established.
Group Agreements exist if the property is part of a body corporate arrangement or residents association. It details the obligations for being a member of the group.
Building inspection: this is a vital step regardless of the age or the appearance of the property. The inspector can let you know what state the house is in and point out any potential issues to be aware of.
Section inspection: when you’re looking at the section, keep your eyes open. Are there retaining walls? Are they in good repair? Is the driveway cracking? Can you see any water damage, areas where water might pond in floods, overland flowpaths etc? If you are just buying land, then get in touch with us to understand what you can build on the section and what infrastructure is already in place.
Finance: before you set your heart on a property, make sure you can afford it. Even if you have been pre-approved, it is important to check back with your bank to ensure the property meets the conditions before putting an offer in.
Property Valuation: obtaining the professional report of a valuer will ensure that you are paying the right price for the property and that you are making a sound investment.
As you can see, the due diligence process is an important one to complete when buying a property. It equips you with all the right information you need to make an informed and sensible decision.
Need some help?
Get in touch with us here at Planning Plus if you need any help with this due diligence process. Our experienced team can help ensure you’re making a sound investment when it comes to aspects of property purchase.
Disclaimer As with all our blogs, the information detailed here is general in nature and meant as a preliminary guide only. This should not be substituted for your own investigations or use of your own professional’s.