Due Diligence: How to Find the Stuff You Need
by Nancy Chadwick
Due diligence is extremely important, regardless of the type of property you’re
thinking of buying. In development property and land deals, buyers start the
fact-gathering process with their first encounter with the property and it
continues until they either bail out of the deal or go to settlement.
Here’s a list of sources of information (people, places & things) that are good
starting points if you’re trying to research a property.
Sales & Ownership Data
Tax assessor information is available in several forms. For every piece of data,
there is a primary source. The primary source is likeliest to be the most
accurate and current source of information. For real estate documents that are
recorded, such as deeds, liens, restrictive covenants, easements and subdivision
plans, the primary source is the actual record of filings maintained by the
applicable governmental department as well as the documents themselves and the
recording information shown on them. These are usually kept at the courthouse
for the county in which the property is located (Recorder of Deeds or Tax
Assessment Dept.). People usually use title insurance companies who send
searchers to the various courthouses to look up records. The deed contains the
legal description of the property, which sets forth the property’s actual
dimensions.
You can also search in free or fee-based databases that allow you to get
information on properties nationwide or in a particular geographic area, such
as: http://www.searchsystems.net; http://www.realquest.com;
http://www.brbpub.com/pubrecsites.asp. These are great tools as long as you
remember a couple of things. They should never be used as a substitute for
hands-on research and inspection if you need results that are current and
absolutely accurate. No database, even a governmental one, is a primary source
of information. The governmental database, however, may be the next best thing
to the primary source depending on the manner in which it was created and the
frequency with which it is updated. When title companies insure property title,
they do not rely exclusively on databases. They send people to where the records
are maintained to physically search them. Real estate appraisers do not just use
databases. They conduct additional due diligence and physically inspect the
properties involved.
For several reasons, the farther you move away from the primary source of
information, the greater the likelihood that the information may not be current
and accurate. There is the time factor. The information has to pass from the
primary source down the line through other people or organizations. In addition,
there is the “garbage in, garbage out” principle. The integrity of any database,
governmental or not, hangs on the thoroughness and competence of the people
responsible for compiling and maintaining it. Databases can save you a
tremendous amount of time and effort. You can use them most effectively as
screening tools and to gather information subject to confirmation and further
research if the situation or property warrants it. In addition, they are
invaluable in identifying contacts if you need additional details or
clarification.
If you want to find out who owns the property but don’t know the address, one
way to be able to identify the property is to go to the municipal building and
look at the tax maps or tax plats of properties in the municipality. By process
of elimination, you should be able to identify the property (thus giving you the
owner name, address, parcel identifying number). It’s a good idea to take a copy
of the tax map with you when you return to the property since this will help you
to pinpoint its location by counting parcels on the map from intersecting
streets or other landmarks, particularly if the property is vacant land. Again,
be aware that some of the information in the database or on the tax maps may not
be accurate, particularly the size & shape of parcel, zoning classification, and
whether the property’s serviced by public utilities.
New Construction Communities
If you want to find out who is or will be building in an area, take one
municipality at a time and get the list of approved subdivisions and land
developments from the municipality (manager’s office, code enforcement or land
development offices). Then you can visit the new construction sites, talk with
the site agents and get brochures. If the jobs haven’t started yet, you can go
to the builders’ websites for preview information.
Municipal Records
You can identify properties that have applied for rezoning or subdivision & land
development approval by requesting a list from the municipality of the
properties. After you decide which properties you want to investigate further,
make an appointment to review the development files and plans at the municipal
office. This is public information, and anyone is entitled to review materials
relating to actions taken by a municipality in public meetings and hearings.
This can be an excellent source of information on owners who may be thinking of
selling their properties.
Utility Maps
Checking the street for manhole covers and hydrants won’t necessarily give you
correct information about whether a property can be serviced by public water and
sewer. Instead, consult the mapping available through the municipal or regional
sewer & water authorities, county or regional planning commission and private
water companies.
Zoning
Each municipality adopts a zoning ordinance and zoning map for the properties
within its borders. This material is available for review or purchase at the
municipal office or through private vendors. Always make sure you’re looking at
the most current ordinance and map since these are amended periodically. In
addition, read the whole ordinance and not just the section on the particular
zoning classification because the ordinance contains provisions that apply
across the board on issues like definitions of terms used, accessory uses &
structures, signage, and minimum frontage requirements.
The zoning officer (a/k/a code enforcement officer) at the municipality is the
one to whom you should direct your questions about the zoning ordinance or map
or if you want to find out anything about a property that may have happened in
the past, like granting of variances, special exceptions or conditional uses.
Proposed Highways & Facilities
Depending on the nature (federal, state, local), you can access information
through the municipality, county/regional planning commission, municipal
comprehensive or “master plan” and federal or state agencies.
Profile Data of Area or Municipality
Municipalities and county or regional land planning agencies prepare
comprehensive or master plans as a primary tool for their land planning. These
plans contain a wealth of information pulled from various sources including US
Census Bureau, Dept. of Labor, US Dept. of Agriculture soil surveys, FEMA
floodplain mapping. In addition, you’ll find data about natural resources,
statistical data on housing stock and non-residential developments, existing and
proposed roads, transportation facilities, utilities, plants, commercial
operations, hospitals and schools. Be sure to check out the proposed land use
map and accompanying text. Here you might find clues for future growth areas and
even potential for successfully rezoning particular properties. The master plans
are available at either the municipal office or the county/regional planning
agency.
Floodplain Maps
To determine if the property is in an area subject to flooding, consult
floodplain maps. These are available through either the municipality,
county/regional land planning agencies, or FEMA (http://www.fema.gov).
Bio:
Nancy E. Chadwick, President and Broker of Chadwick Real Estate, Inc., is a PA
licensed real estate Broker and Instructor. She entered the real estate business
in 1982 following her career in the Philadelphia legal community as an
environmental and litigation paralegal. She has specialized in land development
for most of her real estate career, achieving top-producer status in several of
her past agency affiliations. Her services have been sought by a wide range of
clients, including builders and developers, non-profit organizations, estates,
REO departments of financial institutions, medical groups, consumers and other
real estate professionals.
Her book Land Buying & Selling is based on the state-of-the-art courses she
created that have been approved by the PA Real Estate Commission (for real
estate brokers and agents) and the PA Board of Certified Real Estate appraisers
(for certified appraisers and appraiser candidates). She also teaches courses
exclusively for consumers.