A resurgence in commercial real estate markets in many parts of the United States has both veteran property investors and new players engaged in more – and larger – transactions. Because of the financial stakes involved in buying and selling commercial real estate, investors need to conduct thorough due diligence on transactions prior to closing. A common question that arises is whether to use a commercial due diligence checklist.
How A Commercial Due Diligence Checklist Stacks Up to a Tailored Process
Commercial due diligence checklists are readily available online, and can be helpful in the pre-transaction phase by helping sellers identify issues that need to be resolved in order to get a property ready for sale.
They can also assist prospective purchasers or investors in identifying whether there are obvious issues with the property that could warrant further investigation. These checklists can help prospective purchasers identify when it may be beneficial to get other professionals involved if the transaction proceeds.
Follow the Information Trail (Not Just a List)
While using a checklist can serve as a useful guide when scouting commercial properties, relying on a checklist for the actual transaction due diligence can bring unintended consequences. If you rely on a commercial due diligence checklist, your due diligence is unlikely to go beyond the items on the list itself. This could result in missing key information that may be material to a specific investment decision. There is also the risk that a prospective buyer using a checklist won’t have the full picture of the potential issues in a transaction.
A more thorough real estate due diligence process, one that is tailored to the transaction itself, can limit risk and help potential buyers and investors make sound decisions.
Using a bespoke due diligence process can help real estate purchasers and investors ensure a thorough analysis, so that nothing is assumed or left open to interpretation.
When you outsource your due diligence needs to an expert service provider, you’re getting the benefit of trained, experienced legal professionals who know exactly what to look for – and what to look at – in commercial real estate transactions. Baer Reed provides a variety of legal support services, including due diligence solutions. To learn more, contact us online today, or call us at (888) 433-1990.
- On December 17, 2018
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