The PropertyCondition Report is an important due diligence tool thatevaluates the building improvements and systems at a commercialproperty. It answers the questions:

1. What is wrong with the asset now? and
2. What capital improvements will be necessary in thefuture?

A lot of owners say, “let the buyer do their own due diligence,”which is what occurs the majority of the time. A buyerabsolutely should do thorough due diligence!

But I actually think a Pre-Sale Property Condition Report done for thecurrent owner is a good value. When you bring an assetto market, your broker may be entertaining offers from a host ofwould-be-buyers who are in a highly competitive situation with eachother. If you put a Pre-Sale Property Condition Report in the data room thatfairly identifies the asset’s issues, then once you have your buyerunder contract, they will have a hard time re-trading you on abuilding deficiency. It will also allow the owner timeto address any potential deal killer issues with the buildingbefore bringing the property to market – either by correcting theissue, reducing the asking price, arranging a warranty or othercontingency.

A Pre-Sale Property Condition Report is often akin to thebuyer’s Equity Property Condition Report. This is adetailed report often with multiple specialist inspectorsevaluating the various building systems (such as an HVAC specialistor a roof inspector, as required by the type and condition of thebuilding). This level of detail is important to anticipateany issues the purchaser may identify.