Lots of investors have spent their hard-earned money to acquire property that turned out to be problematic. The obvious reason is the simple fact that such investors did not take time to do the required investigation about the property before parting with their funds. Every wise investor keen on buying property must conduct due diligence on the property before committing funds to it. Conducting due diligence allows the investor to gather full disclosure on the facts and conditions of a land or housing unit they intend to acquire, before the completion of a transaction. This shouldn’t be ignored by any prospective buyer of real estate if they desire to sleep well at night after their purchase.
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A key part of due diligence is for an investor to engage his/her lawyer to visit the Lands Registry of their state to obtain the true status of the land; as to whether the land is free from Government acquisition or committed. Because if such land is committed or under government acquisition, irrespective of any title presented to the buyer, it may be risky to buy. However, some investors who are high-risk takers may decide to invest in a land which status is freehold and most times succeed. Risk-averse investors may be reluctant to take part in such an investment opportunity for fear of losing their funds.
When people talk about due diligence in real estate, they tend to limit it to the property alone, which most of the time leads them into the hands of fraudsters or Omoniles who would eventually sell the same land to different buyers at different times. It is alright to conduct due diligence on any land under a transaction, but it is equally necessary to do the same on owners of the land or the developer that is directly linked to the property in question.
You may wish to also carry out due diligence on the marketing company that presents a land or housing unit for sale. In other words, as a potential investor, there is the need to know your marketer or real estate consultant/agent. It is imperative to ascertain the level of their knowledge of the real estate business, trustworthiness and integrity, before choosing to do business with them.
A real estate agent who does not have enough knowledge of the land he markets to the public or the location where the land or housing unit is, may not be a trusted source for an investor to buy land from.
Additionally, buyers should endeavor to secure access to information about any land they intend to buy from the estate agent who introduces the land to them from the commencement of the transaction to its terminal point. This assists the buyers in making the right buying decision. When the investor eventually buys a property, the consultant/estate agent must follow up on documentation and other necessary things that the client needs to have at his disposal. They should ensure that both paper and physical allocation of the land is given to buyers when payments to the land transaction are completed.
In conclusion, prospective buyers of land and investors can only enjoy sustainable returns on their investments, if due diligence is conducted on any land or housing unit they intend to buy. Anything short of this may lead to wasted effort and loss of funds. So, take caution!
Very true, I believe due diligence is the very key that opens up great success and ensures peace of mind after a deal is closed.
Yes, it’s always better to go the extra mile to ensure that the property you are buying has no issues.