What is the Property Condition Assessment Report?

Purchasing a new commercial property is perhaps the biggest investment you’ll ever make in your business career. Considering the price and risks associated with commercial property, you need to make certain that you get your money’s worth by performing proper due diligence. 

In that regard, a property condition report provided by a qualified professional is not only important for safeguarding your investment and ensuring peace of mind, but it’s often also required by all major lenders. 

As such, the key step in the purchasing process is hiring an inspector who will evaluate the commercial property and provide you with an estimate of the repairs contained in a property condition report.

So, let’s go into a bit more detail regarding commercial inspections and the property condition assessment report, and figure out exactly why it’s so important. 

Why Having A Commercial Property Inspected Is Essential

A professional assessment of a commercial property is a critical step in the due diligence process for investors of commercial properties. Because a property condition assessment follows a certain industry standard, you can consistently rely on it to gain a thorough understanding of the property’s condition. 

Furthermore, a property condition report also outlines potential issues with the building and provides you with a thorough knowledge of long-term and short-term maintenance requirements. 

This serves the purpose of saving you money later down the road as you can circumvent expensive repairs or potentially negotiate a fair purchase price. 

Moreover, a professional assessment of the property also confirms whether it’s suitable for the needs of the business or if it meets code requirements. 

Ultimately, having a property condition report in your hands allows you to make informed decisions about the lease or purchase of the property - something you will likely benefit from in the future. 

What Is Property Condition Assessment?

A property condition assessment or a property condition report is an evaluation of the expenses that might be necessary to maintain the property in the long or short term. 

This helps buyers and lenders determine whether the property is worth it as they’ll have the data to form an informed opinion on the condition of the building and how any improvements will influence financial performance.

The industry standard for property condition assessments was developed by the American Society of Testing Materials (ASTM) and their guidelines define proper customary and commercial practices for conducting objective property condition assessments. At the time of writing, these guidelines are widely adopted by most professionals in the real estate industry. 

The scope of work, the key procedures, and the roles of all the parties involved (including the inspector) are defined in the ASTM E2018, which serves as the guideline recommended by all lenders. By following this particular procedure, you can expect a level of consistency, and an easier time conducting due diligence when having a property inspected.. 

In fact, the E2018 guide was established both to define the proper practices and also, in the words of the ASTM, to:

• Facilitate consistent content in each property condition report
• Develop reasonable expectations and recommendations for on-site inspections, document reviews, and any other research made during property condition assessments
• Set a baseline industry standards employed during assessments 
• Set proper protocols for inspectors to communicate their findings, opinions, and observations in an effective and meaningful manner

What Does The Property Condition Assessment Include?

The biggest aspect of a property condition assessment is a walk-through survey conducted per the ASTM E2018 protocols. Its purpose is to identify any physical defects with the structural components, systems, and equipment of the property. 

Still, it’s worth noting that the report will exclude deficiencies that can be easily remedied through routine maintenance or minor repairs. 

In addition to a walk-through inspection, the inspector will also review the documentation and conduct interviews. These augment the visual inspection and provide a better understanding of the various facets of the property and its physical deficiencies. 

The culmination of these detailed assessment practices is a property condition report. It incorporates all data collected during the visual inspection documentation review and interviews. 

Even though a professional evaluation of the entire property is enough on its own, a property condition report also includes the inspector’s estimates of probable costs for any repairs regarding the identified physical defects.

This provides you with a complete understanding of the costs related to owning the property and can help you budget accordingly. You can also use it to negotiate a more reasonable purchase price or lending to offset any remediation costs. 

What Features Are Inspected?

The entire property is a broad term, so it’s helpful to know what areas and features inspectors evaluate during the walk-through assessment. 

In short, it’s necessary to check the building’s exterior and interior features. On the inside, inspectors will visually check the condition of the following:

• Structural frame
• Plumbing
• Electrical
• HVAC
• Life Safety
• Fire protection system
• Various interior elements

The exterior of the building is equally important for the overall condition and value of the property, which is why it’s necessary to inspect the following:

• Roofing
• Building envelope
• Topography of the site
• Water drainage
• Curbing, parking, and paving
• Landscaping
• Additional utilities

The condition of all these elements will be explained in the report, along with photographic evidence that provides the context to the findings.

Schedule The Best Commercial Inspection In Town

Depending on how the assessment pans out, you may end up having to make costly repairs or nothing at all. The report provides you not only with peace of mind, but can also be used as a valuable bargaining chip to renegotiate a more favorable price to accommodate the repair. If the seller/lenders agree to do so, they can conduct the repairs before closing. 

If you’re not sure who to hire for a property condition assessment, Certified Inspectors are the safest choice. We’ll meet with you face to face and we’ll address any concerns you may have. 

Moreover, our Certified Master Inspectors have the necessary expertise in commercial building construction, and we also have multiple years of experience conducting commercial inspections. Considering we’re the top-rated inspection company in Palm Beach, Miami Dade, Broward, Hernando, Treasure Coast, Citrus, Sumter & Pasco counties, you can rest assured that your investment is safe when we’re on your side.

Schedule an inspection by calling (561) 570-6311 or filling out our contact form.