Best Practices in Real Estate Due Diligence

Best practices for buyers and investors

The acquisition of a real estate property represents one of the most significant investments we will make. To protect this important asset and avoid unpleasant surprises, we recommend these essential practices:

Before starting the search

• Clearly define your objectives: Establish the purpose of the acquisition (housing, investment, development) and non-negotiable criteria.
• Determine your actual budget: Consider not only the purchase price but also taxes, notary expenses, possible renovations, and a contingency fund.
• Identify priority areas: Research market evolution in areas of interest, future urban plans, and valuation trends.

During the selection process

• Request initial basic documentation: Updated real folio, approved plans, tax and service payment receipts, construction license (in recent properties).
• Verify correspondence: Compare documentary information with physical reality (surface area, boundaries, constructions).
• Research the environment: Evaluate nearby infrastructure, future projects in the area, accessibility, and available services.
• Request a professional report: Hire a specialized due diligence service before signing any binding commitment.

In the negotiation phase

• Condition the operation: Include resolution clauses in case of negative findings in technical-legal verification.
• Negotiate specific guarantees: Request specific guarantees on aspects identified as potentially problematic.
• Provide for regularization mechanisms: Establish responsibilities and deadlines to remedy possible documentary or physical deficiencies.
• Consider an escrow deposit: Evaluate using a partial price retention mechanism until the resolution of identified contingencies.

Remember that investment in prior verification is significantly lower than the potential costs of resolving problems discovered after acquisition. A professional due diligence not only identifies risks but can also strengthen your negotiating position.

Best practices for sellers and agents

Properly preparing a property for commercialization not only facilitates the transaction but can increase its perceived value and reduce time to sale. Sellers and real estate agents can implement these recommendations:

Preparation prior to commercialization

• Perform a self-verification: Anticipate possible objections by reviewing complete documentation and the property's physical state.
• Regularize pending situations: Resolve pending registrations, update plans if necessary, and settle tax or service debts.
• Gather complete documentation: Prepare an orderly dossier with all relevant documentation (titles, plans, permits, payment receipts, etc.).
• Consider a prior certification: A verification report performed by an independent third party generates trust and speeds up the sales process.

During the commercialization process

• Offer total transparency: Provide complete and truthful information about the property, including aspects that might require attention.
• Facilitate access for inspections: Collaborate with professionals who will perform technical or legal verifications.
• Highlight verifications performed: Actively communicate that the property has undergone a certification process, differentiating it in the market.
• Document improvements performed: Keep invoices and documentation of significant renovations or improvements implemented in the property.

For real estate agents

• Implement basic verification protocols: Establish standard procedures to verify essential documentation for properties being commercialized.
• Recommend due diligence services: Offer your clients the possibility of performing professional verifications as added value.
• Collaborate with specialists: Establish relationships with sector professionals to efficiently resolve identified contingencies.
• Protect your professional responsibility: Complete and verified documents reduce the risk of subsequent claims against the agent.

Essential verification checklist

A basic verification checklist allows both buyers and sellers to perform a first evaluation of the property's situation. Below are the fundamental elements this checklist should include:

Documentary verification

• Updated real folio (not older than 30 days)
• Purchase-sale deed and preceding titles (at least 10 years)
• Measurement and/or division plan approved by competent authority
• Current cadastral certificate
• Real estate tax payment receipts (last 5 years)
• Public service invoices (water, light, gas) with payment proof
• In case of recent buildings: construction permit and final work approval
• For horizontal properties: co-ownership regulations and debt certificate

Basic physical verification

• Correspondence between declared and actual surface area
• General state of structure and construction elements
• Operation of electrical and sanitary installations
• Signs of dampness or leaks
• Boundary and access verification
• Possible affectations by visible easements
• State of common areas (in horizontal properties)

Elementary urban verification

• Zoning and permitted uses
• Applicable construction restrictions
• Urban projects that could affect the property
• Accessibility and available services
• Potential environmental risks

This checklist represents a starting point but does not substitute for a complete professional verification. For significant transactions or complex properties, we always recommend hiring a specialized real estate due diligence service.