What due diligence do you need to do on a property?

There are 4 main categories of due diligence you should undertake:

1.Pricing analysis

This includes a detailed review of recently sold properties in the same building, street, suburb that are comparable. Look at what those properties sold for, were they superior or inferior to this property, what information you have gained from the real estate selling agent and establish what you think the property is worth in the current market. Note: vendors do occasionally have unrealistic expectations and will not always sell at a price that reflects the current market.

2. Council

Council due diligence includes checking:

• Any renovations done to the property have been approved and occupier certificates issued

• No outstanding orders on the property e.g. No order to remove unapproved building works

• Any submitted or approved development applications for neighbouring properties that may impact on your enjoyment

• Precedent in the street for approval to do further renovation

3. Building and pest

Spending $500 on a building and pest report for a property that is going to cost you more than $1m is well worth it - even if you feel like it may be a waste if you don't end up buying it. A building and pest report will provide you details of the current state of the property, works that may need to be done and a view as to the urgency of such works.

This can be a powerful tool in negotiating price where you are the only interested party.

4. Strata records

This is only applicable if you are buying into a unit / apartment block and is a record of financial records, meeting minutes, correspondence and a history of repair work of the building. The report will summarise all relevant information and give you a view as to what you can expect for short term and long term levies based on the current money available in the strata fund and future work which has been identified.

Generally a building with a pool, lift, gym etc will have higher levies than those without, however, all buildings need ongoing maintenance including painting, garage doors, gardening, rubbish bins, fire safety etc.

When should I do the due diligence?

The best way to do your due diligence is to start the process as soon as you have identified a property that you like. This may mean that you are running due diligence in parallel to having your solicitor review the contract to ensure you are not wasting valuable time. The balance for most buyers is ensuring they are not spending money on due diligence for a property that their budget gives them no chance to buy, so it is recommended to start with the pricing analysis and ensure you are in the ball park.

What do you do with your due diligence when you are done?

You weigh up all the information and decide if based on what you have discovered do you still wish to purchase the property, and if yes, does any of the information uncovered impact the price you are willing to pay.