What is a Property Condition Assessment?

When buying a piece of real estate there’s nothing more important than conducting a proper due diligence.  Whether you dig deep into the financials, camp outside of the asset in your car to get a better feel for the area, or check the major mechanical components, doing your due diligence is an absolute must. 

No matter your process, a property condition assessment should always be on your list.

Why? 

It gives you a glimpse of the entire asset in one report, component by component, with action items to put the headaches to rest.  Plus, even if you don’t require a PCA as the buyer, any bank or lender will require one. 

So what is it and why is it important?

Think of the process of a home inspection.  The inspector goes through the interior and exterior of the house to make sure everything is up to code and that there aren’t any major defects the seller is hiding. 

Now picture that on steroids. 

The main difference between the two is the detail of the investigation.  When a PCA is performed on a commercial real estate property, an inspector goes to the site and evaluates the condition of all improvements on a site.  Some of these items include the building itself, parking lots, landscaping, plumbing, utilities, outbuildings, signage, roads, walkways, roofs, HVAC, etc.  Every single aspect of these items is looked at and evaluated.

The idea is to leave no stone unturned.  If there are any deficiencies in the asset, you want to find this out ASAP before closing, so you’re not left with a surprise $150,000 bill for a new HVAC system two months after closing. 

Property condition assessments help the buyer fully understand what they’re getting themselves into and will point out any items that need to be addressed.  The whole process usually only takes a week or two, and will run you about $2,000-4,000.  Think of it as a mini insurance plan before you even close on the property.  It may not be a requirement for some buyers, but it’s an absolute must for most.