OfflineI wanted to make a post about doing due diligence. We have seen this information many times on this website and it seems to be common sense.
However, I made a little mistake. I did not do the proper due diligence on a property I closed on earlier this month.
The property was a HUD property. HUD had listed the home as a condo. I just skipped over this assuming that it was a mistake by the appraiser for HUD. I did not look into this. The property is completely detached. It sits on land with no other houses touching it. It even looks like a home. I assumed it was a home.
After purchasing the home I found out that, indeed it is a condo. The land that the property sits on is one lot shared with about 10 other property. Because the lot is a shared area they consider the property a condo.
Because the property is a condo it was devalued in an appraisal by $10,000.
The homes right across the street with individual lots sell for $10-$15,000 more than the property I just purchased.
I based my offer from the comparables for properties that have their own lot and not condos. Originally this was great deal if the property was a home. Don't get me wrong it is still a good deal its just not great.
I would hate to see others that do not follow up on due diligence. Remember to search anything out on properties you will be working transactions on.
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Hey Nate,
I'm a long time DG follower since 09, but believe it or not, I'm still a newbie who is desperately trying to get my first deal done! The reason I'm glad I found this post (which btw I'm surprised no one has commented on this post) is because although I haven't completed my first deal yet, I feel that I'm just one step closer to making it happen and I'm really hoping you can help me out with that. Besides having my own Real Estate Agent and access to the MLS, I'm currently working on a FSBO deal. And since one of the awesome perks of DG.com is networking with awesome people who are there to help you out, I am working with a well known respected DGer, John Abreu. So my situation is that I just recently spotted a house a few days ago with a FSBO sign with the basic details of the house and the contact number, and I am awaiting the seller to return my call. With John's help, I have a Property Inspection Form that he emailed me and I am ready to have that filled out just as soon as I speak with the seller. What I am actually here for and that I wanted to know from you Nate, is do I need to view the repair costs and/or upgrades of the property in person or should I just assume the seller has all that information since they're not using a realtor to sell? The form sheet seems pretty straight foward, but its just that I've been so worried to take action because I didn't want to mess up from doing something I've never done before. Once I have the form filled out and let the seller know that John will be in touch to have one of his cash buyers from CA take over, I know it'll be all down hill for me and I'll finally be able to make my first deal happen!! Any feedback and/or advice would truly be appreciated. Thanks Nate and have a good one!
Andre
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