Welcome to the GeoWarehouse Blog

Check in regularly to receive news, updates and useful information about GeoWarehouse and other real-estate tools and resources.

Archive for the 'Due Diligence in Real Estate' Category

geo1Valentine’s Day is here and love is in the air. We know that not doing our due diligence with respect to a Valentine date can mean a bad Valentine’s Day surprise and real estate is no different. First impressions can be scary because not everything ends up being how it appeared at first glance.

You hope that when you meet your clients they will have all their information, be forthcoming and have a clear vision about what they want – but that is often not the case.

Really on any deal, some investigation concerning the property and homeowner will need to take place. This will mean assessing key issues from a due diligence perspective.

Where a homeowner is concerned, your commission will come out of the sale of the property. You definitely want to ensure that there is enough equity in the property being sold to cover commission and closing costs. If you are representing a buyer then you will certainly want to run a search on the home being purchased to ensure that the seller has sufficient equity to cover closing and real estate fees.

Also, is your client the legal homeowner/the only legal homeowner? So often parents or other people show up on title and the homeowner honestly didn’t realize or forgot. Other times this non-disclosure can bare a more sinister undertone. Verifying who the legal homeowner of a property is ensures that you have connected all the dots.

On the topic of real estate fraud – it is not unlike a Valentine’s date with a player. The fraudster has their agenda and they are willing to pull the wool over your eyes to achieve it. Pay particular attention when performing due diligence to the parties to the transaction. If a lawyer or lender will end up on title to the property, something may be amiss.

Also – did you know that a property details report is like a veritable credit report on a property? Think about it – when you call into your bank they ask you verification questions such as how long have you banked here, is anyone else on your accounts, what was the biggest transaction you made last month, etc. You can do the same using what you know about the property to suss out fraudsters.

The financial and sales history on a property is also important – too many transfers, strange transfer amounts and related transferees are all signals that something could be amiss.

TO avoid a bad Valentine’s Day surprise, whether with a date or with a house, the best thing that you can do is be alert. Due diligence in real estate can help you protect yourself as well as your client.

Don’t get set up – get GeoWarehouse, and do your due diligence in real estate. Visit www.geowarehouse.ca today.

 

 

Facebooktwittergoogle_pluspinterestlinkedinmail
November 25, 2015

geo2Sometimes basic due diligence can uncover things on a real estate deal that would otherwise open a can of worms and trigger a chain of actions that can become a major pain! Unfortunately, in real estate, from people who don’t accurately recount their information to out and out fraudsters, due diligence is one vital activity that is the burden of every real estate sales professionals.

Most real estate sales professionals, at the very least, when taking on a new listing will perform a property search to validate that their client is the legal homeowner. Now, some real estate sales professionals will go a step further to validate that the mortgages registered against a property match what the client disclosed at the time of engagement.

One very common thing that can come up on a new listing is an undisclosed mortgage or lien on the property being listed and depending on the amount borrowed/owed it could consume some or all of the property’s equity – in the worst circumstances, not even leaving anything left to pay commissions and closing costs.

Your due diligence may begin with a basic property search that could generate information that leads you to want to do some more digging. The next step in the evolution of due diligence in this regard would be to look at a Parcel Register*.

A Parcel Register* is going to tell you the legal owners and type of ownership, legal description, registered encumbrances – not exclusive to mortgages, these could be liens, easements and other types of registrations.

Should something solid be revealed on a Parcel Register* you can now go back to your client and question them. Perhaps there is a lien registered and they have the money to pay off the lien – but don’t have the contact information for the registrant.

The next step in the evolution of due diligence is to look at the Instrument Image associated to the registered lien in question. This will provide you with the registrant’s complete information including how to contact the registrant or their legal representative.

Next you may want to have a look at the sales history – particularly the amounts of transactions and who the buyers and sellers were.

Taking the basic measures above will ensure that you are spending your time working on good quality deals that have a high probability of closing which in the end makes you more profitable!

GeoWarehouse has the tools for both basic and more in depth due diligence. Ensure that you are covered – protect your own assets. Visit www.geowarehouse.ca today.

* An official product of the Ontario government pursuant to provincial land registration statutes.

 

Facebooktwittergoogle_pluspinterestlinkedinmail

geoThis question is fair enough and asked often enough for us to blog about it. There are many different skilled professionals involved in a real estate transaction: you, the real estate sales professional, a lender and/or mortgage broker, a real estate lawyer and many more. You, however, are the first line of defense when it comes to the long list of due diligence measures that have to be taken to prevent mortgage fraud and ensure that good quality deals are taking place.

OREA defines due diligence as “the reasonable analysis or research that is done to check or verify material information about a property.” https://www.oreablog.com/2013/02/what-is-due-diligence/

Real estate sales professionals can and do choose how far they can go with due diligence, making it a time consuming and costly task on some deals. With all the tools and capabilities available, one could spend countless time and a significant amount of money performing due diligence – so is there in fact such a thing as too much due diligence?

One way to mitigate the time spent on due diligence is to evaluate what due diligence to perform and when you do it.

For example, common types of due diligence performed by real estate sales professionals include:

  • Verifying who the legal homeowners are
  • Obtaining a survey
  • Validating the legal description of the property
  • Reviewing the sales history on a particular property
  • Checking for encumbrances like mortgages and liens and more…

Once you know what needs to be verified on every deal, your next step is to look at how you can get it verified. This is going to come down to the tools and technology you use to perform due diligence. Place a monetary value on your time and pursue tools that do as many of the due diligence items you need to perform, in one place – even in a single report. This will reduce the need to do 5-6 things separately, instead doing them all together.

Finally, when should you do it? We firmly believe at the application stage. Once a client has made the decision to engage you, due diligence should begin. Again, getting back to placing monetary value on your time – wasting time on deals that have issues is not good for you or any of your colleagues along the supplier chain. Not only do you stand to save time and expense, but you also stand to save credibility by performing due diligence at the point where a customer signs on.

There can never be too much due diligence when it comes to preventing real estate fraud. Generally speaking, if you establish a standard framework to perform due diligence within a set time and expense parameter, you should never find performing due diligence too time consuming and should be able to get through it with ease.

For more information about GeoWarehouse, a revolutionary tool that helps real estate sales professionals perform due diligence, please visit www.geowarehouse.ca

 

Facebooktwittergoogle_pluspinterestlinkedinmail

Browse by Category