A property condition assessment (PCA) looks into the structural health of the building and identifies issues such as pest and mold infestation. Any good realtor will strongly recommend a proper condition assessment before closing a property transaction. Assessing the state of a property before making a purchase is highly recommended as part of exercising your due diligence. Doing so will help safeguard your interests by doing the following:
Identifying Physical Defects
Whether big or small, any physical defects present a risk and must be addressed to keep the building safe and attractive to tenants. Remember that you will bear the costs of correcting any physical defects if you don't identify and raise them before closing the property purchase.
A property condition assessment consultant will identify building code violations, bad design, poor building materials, and poor workmanship. He or she will then inform you whether these are defects you can leave in place and if you can use them to negotiate a lower purchase.
Estimating Restoration Costs
An important question when purchasing a property is how much will it cost you to fix various defects and restore the property to a usable state. This question is especially important when you are buying a commercial property. High restoration costs translate into a longer time to recoup your investment.
With a property condition assessment report, you can make a prudent financial decision on the suitability of the investment. Is it worth it or not? If you are purchasing the property using financing, your lender will want to see the report as well to ensure their money is safe.
Protecting Against Future Liability
Some defects can be so serious that they compromise the safety of the building. Upon taking possession of the property, you assume all liabilities. If a tenant comes across harm, you are open to a legal suit and the attendant legal penalties.
A property condition assessment will show the extent of any faults and defects, including inherent defects like poor stairway design. In addition, it will assess the severity of these defects and their implications on your legal standing.
Providing Leverage for Negotiation
The property condition assessment report is a powerful negotiation tool. It provides professional justification for asking for a lower price or concessions. You can force the seller to fix some or all of the identified defects before closing. The alternative is to lower the property's price by the estimated cost of restoring the property.
Are you looking for a way to ensure your intended property purchase is a worthy investment? If so, talk to a property condition assessment consultant about conducting a PCA to protect your interests.
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