Underestimating the technical report of a property is a common clients’ mistake, from who we often hear the sentence: ” I am sure that my home and all its papers are already ok”.
This is the first thing that Mr. Antonio Anile, the person in charge for the partner agency GEP San Vincenzo, Livorno, has told us to prove how, very often, the vendors do not understand the importance of a property due-diligence.
As the saying goes – better safe than sorry – there is nothing more correct for the real estate sector too. The most common mistake? Underestimating the importance of a meticulous screening of all the technical and legal aspects before putting your home on the market. Building abuses, plan discrepancies, standards absences, passage servitudes and the right of first refusal are just a few of the “traps” which may blow a negotiation up. Unfortunately, the Italian precautionary culture is still too poor: not only the clients one, but the real estate professionals too. On my opinion and especially in the interest of the vendor his/herself, it is fundamental to entrust yourself to a specialist (architect or surveyor) able to notice every kind of anomaly which may compromise the future of a negotiation.
I will give you a concrete example of that. We concluded an important sale near San Gimignano to some English clients: I perfectly remember that, during my first meeting with the sellers, the owner was sure about all the documents of his home. However, after the edit of a due diligence, some cadastral/urbanistic discrepancies emerged. We were able to resolve them before finding the right buyer for this property. In this case, all the discrepancies could be solved, but we were very lucky!
Surely, Mr. Anile’s experience is not the only one: the majority of the vendors do not recognize the importance of a due-diligence before entering the property into the market. Why to do it?
Two are the main reasons:
- Let’s imagine which could have been the consequences if, in the above mentioned case, non-solvable discrepancies were emerged after the buyer’s arrival or after his/her deposit payment. In the worst case, some original situation rehabilitation works were needed, but it is not said that the potential buyer, who had already paid a deposit to the vendor – and I want to underline that, regarding prestigious properties, the deposits are extremely high – will remain interested into the purchase of a property which does not have the same features of the one visited at the beginning. If so, the buyer can demand the vendor the deposit already payed;
- The international clients who want to invest abroad usually organize a few-days-trip. Therefore, it is fundamental that the owner enables the real estate agent to close the negotiation. With the English clients who purchased the property in San Giminiano, the entire process was good, because, from their very first visit, they were informed about the existing discrepancies.
Dr. Anile’s experience and proof gives us no doubts about the importance of a due-diligence but, in this case, his skills and professionalism were able to solve any discrepancy.
Dr. Anile, did you ever face a situation worse than that?
Unfortunately yes.. the absence of a technical report was fatal with a Russian client who, after having visited an important villa near Lucca – 3 millions/euros – and demonstrated his interest in the purchase, asked us for the property due diligence through his lawyers. Unfortunately, there was no due diligence yet, because the owner did not follow my suggestion and did not do it. After a month, the due-diligence – which can not be made in a day – was ready but the Russian client was no longer interested because he had already got his eyes in something else.
Surely, this experience let us understand how the absence of a due diligence may compromise a negotiation.
Mr. Anile, how try the group and every professional to convince the owners to do a due-dilligence?
Every day, through our institutional communications and visits, we try to make our sellers understand the importance of a due diligence. However, they often do not follow our suggestions, accusing us to be too “meticulous” compared to other real estate agencies. Our job is to give a consultancy to the owners by explaining them, among the other thing and even if it means, in a starting phase, an higher amount of time to put the property on the market, the importance of a technical report too. During the negotiation, instead, all the interests are converging and aimed to close the process in the minor time possible.
So, I ask myself.. does the investment of a small amount worth the risks and wastes of time prevention?