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How important is due diligence when buying real estate?

If you are interested in purchasing commercial property in Houston, having the right information at your disposal is crucial. Fortunately, there are steps you can take to properly vet a piece of property before buying, which will help you determine whether the purchase will make for a sound investment.

The National Law Review stresses the importance of due diligence when it comes to commercial real estate. The first step in the process is knowing which questions to ask when reviewing all aspects of a potential purchase. For instance, you may want to consider how the property could be used in the future, as well as what rights you will be privy to once a sale has been finalized. Of course, there are other considerations that should be made outside of the property itself when performing due diligence.

The entity actually selling the property also merits some consideration. Documentation is key in this respect, and can include profit and loss statements, tax returns, loan agreements, bank statements and any other items that could paint a picture of the seller. You should also take some time to go over the details of the deal itself, as well as matters related to financing.

Because the due diligence process can be exhaustive, be sure to include language within the contract that permits you to thoroughly review all parts of the sale. Sellers may be reluctant to turn over documents in a timely manner, and having specific contract language will provide an impetus to do so. It’s also a good idea to state explicitly within a contract that you will not go through with a sale if the due diligence language is not agreed upon by the seller.

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