Regardless of your negotiating style, information is power; especially focused, specific information that is actionable and can be used to re-define the position of your negotiating partner. For a purchase of almost any property, a geotechnical study can uncover potential site characteristics that would add costs to the project and which would thus necessitate a commensurate reduction in the sale prices.

To illustrate this concept, it might be best to use some examples of sites where a basic due-diligence study alone wouldn't help clients in predicting subsurface troubles ahead, and therefore would not avail them at the negotiating table where these costs could have been defrayed. Let's keep in mind that geotechnical engineering fees for due diligence studies generally range from $2,500 to $10,000 for most commercial sites.

1. The Case of Beautiful Natural Slopes – After Purchase D $10,000 to $500,000
   In hilly or mountainside terrain, especially in older developments or in developments in rural areas, it is not uncommon to have non-engineered rock cuts or soil slopes adjacent to the property.  These slopes may be left as non-engineered/non-maintained areas for aesthetic reasons. It is also not uncommon for those slopes to remain stable for years, and then be subject to sudden failures either from above - which can damage walls and fill swimming pools with debris, hopefully not crushing anybody at the same time! - or from below - possibly swallowing a part or all of your building.  It is important to remember that the person performing your property condition assessment may or may not be aware of this, because these are geotechnical issues. Having a budget for limited geotechnical consulting on an existing property can be a huge win in these cases.
   
   
2. The Case of “Just Not Very Good Soil” - New Development – After Purchase D $20,000 to $100,000
   For a new development, it is essential to obtain a soil study prior to purchase (see my last blog on 6 signs you need a geotechnical report). On some sites there are big issues, such as geologic hazards, shallow rock or groundwater, which have a large and obvious affect on costs. However, on many sites, there are soils that are simply not suitable for re-use as engineered fill for whatever reason. There are also soils that may require moisture conditioning, over-excavation, etc. A question not asked by many buyers or their geotechnical engineers is, “When is this more than normal”? At what point should the buyer look at the report and make the argument that the soil conditions are “just not very good”, and will require more work than similar other sites under consideration? This is an important question to ask your geotechnical engineer, but then of course, shouldn't she be asking you? There is a lot of professional judgement needed in such cases and working with the right, knowledgeable consultant will go a long way here.
   
   
3. The Case of Stringent Local Codes – After Purchase D $10,000 to $30,000
   In some areas of the country, extra requirements for geotechnical reports are necessary to get through the permitting process that may not have been addressed by older, “grandfathered-in” developments.. Many of these requirements relate to geologic hazard studies that look for faults, sinkholes, liquefaction, etc., which can cause catastrophic property damage. These studies are often a formality, and therefore do not have to be performed as part of the due diligence process, but they will need to be done prior to design and construction approval. The costs of these additional studies (even if they are just a formality) are something that should be considered and brought to the table during negotiations, since they can range in price from $10,000 to $35,000. A due diligence engineer who understands your business will explain this so that you can plan accordingly prior to purchase.
   
   
4. The Case of Lots of Little Things – After Purchase D $10,000 to $200,000
   Often times a property condition assessment will uncover a large number of seemingly small distress items, which may include things like floor and wall cracking, moisture infiltration, undermined slabs on grade or pavements, racking windows and doors, buckled veneers, etc.  A geotechnical engineer brought into a situation such as this to perform a limited evaluation could uncover a pattern of distress that indicates on-going soil movement on the site. It is not unusual for minor cracks to be filled and painted and for doors and windows to be reset, so it is possible that more is going on than meets the eye. Sites with expansive soil conditions, on-going settlement of loose or poorly compacted soils, and/or poor drainage can be very costly to repair right. They can also be costly to maintain, and lead to ongoing tenant complaints if they are not correctly repaired at the source. It is surely worth it to have a geotechnical engineer put the pieces together before you buy so the costs can be accounted.
   
   

In short, information uncovered by a geotechnical study can be used as an important bargaining tool during negotiations to achieve a more favorable sales price. When considering the appropriate scope and provider of your due diligence, think about what your geotechnical engineer can do to make you money!