Due diligence
PSA and Due Diligence: Verify Everything
Due diligence is not a formality you clear on the way to closing. It is an active renegotiation window, and what you find is leverage.
Due diligence is leverage, not just protection
Once under contract, the diligence period is your chance to verify every assumption, and anything you find that differs from what was represented justifies a price reduction or a repair credit. Buyers who treat diligence as a box to check leave money on the table. Buyers who treat it as a second negotiation recover real dollars.
Verify three things independently
- The financials. Reconcile the T-12 and rent roll against bank statements and, where it matters, have a third party review them. Confirm the income and expenses are what the seller claimed.
- The physical property. Hire a commercial inspector. On parks that means the roads, utilities, well and septic, electrical pedestals, and any park-owned homes. The inspection report becomes your repair-credit list.
- The title. Get clean title insurance and confirm there are no liens, easements, or encroachments that change what you are buying.
Build your team before you are under contract
The diligence clock is short and unforgiving. Line up your attorney, title company, inspector, and lender before you have a signed contract, so that the moment the clock starts you are executing, not interviewing. A missing team member is how buyers blow a closing window.
Put it to work
Bring your normalized underwriting into diligence and every variance you find becomes a documented reason to adjust the price. Underwrite a deal free.
Questions
What should I verify during due diligence?
At minimum: the financials against bank statements, the physical condition through a commercial inspection, and the title through title insurance. Each one can surface a reason to adjust price or walk.
Can I renegotiate during due diligence?
Yes, that is much of its value. Findings that differ from what was represented, deferred maintenance, income that does not reconcile, title issues, justify a price reduction or repair credit.
Related guides
Part of the RVP Underwriter guide library: practical guides to underwriting and buying income property. Browse all guides, or read the complete free guide with a full worked example.