Real Estate Listings Due Diligence Avoids Problems Later

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Barron's Dictionary of Real Estate Terms defines due diligence in part as "making a reasonable effort to provide accurate, complete information."

A real estate professional should take "reasonable effort" to the extreme, as it's a very important part of their services to the Seller. And, that seller may not even know some of the information the broker/agent must gather, but it needs to be gathered nonetheless.

Deed, survey and legal description

While in many urban areas you're listing a property with an address like "123 Main Street," that's not the legal description of the property, though it may be a part of it. There is a legal description of metes and bounds or lots and blocks that will clearly set out the property that's for sale. Getting whatever documents the Seller has, as well as getting deeds or surveys recorded at the county courthouse is an important part of the job and the listing file. Sometimes the title company will gather this information in advance.

Mortgages and liens

While the Seller should know about all mortgages against the property, they may not have any idea what the current payoff is, and that's important to know in pricing the property if there isn't a lot of equity.

They may not know about liens, particularly tax liens. One person who moved to another state not knowing about an $85 payroll tax obligation for an old business was very surprised to learn that the IRS had placed a lien on all their properties for the eight year old item for a whole lot more in interest and penalties.

There can also be mechanic's liens for work done on the property with disputed payment.

Restrictions and covenants

Every buyer has great plans for their new home or land purchase. It's not a good situation to have them making offers without complete information as to restrictions and covenants that govern what they can do with that property.

Many subdivisions have covenants and restrictions that can prohibit outbuildings, or govern what can be visible in the way of boats or other personal property. It's important to have these current documents in the file for the inspection of buyers before they make offers.


An easement is a right granted to a non-owner to use part of a property, such as an easement for a road to access an adjacent property, a common practice in rural areas. Utility companies have a great many easements to place utility poles, or buried lines and gas pipes along property lines to serve the residents.

While easements do show up on surveys, they are also described and recorded in documents at the courthouse. A buyer might find it important to know that their planned major deck expansion isn't possible, as there is an easement for a gas line under the area in which they wanted to build it.

"Diligence" is the keyword

Listing a home or other real property isn't just putting a price on it and placing it in the MLS. A careful real estate professional will want every scrap of information about the property that they can get.

Look at it this way; if all of this work is done on the front end, a buyer will have everything they need to make an offer decision in their hands much more quickly. Having questions answered before they're asked isn't only a professional approach, it's one that will save the agent's time later, and accelerate the process from looking through an offer and purchase.

An example comes to mind in my own very rural area of a listing broker not paying attention and costing his seller not only a sale but several thousand dollars. The only access to a land parcel went through around 50 feet of forest service land. Though the forest service doesn't maintain the dirt track road, they have always required a permit to use it for access to property you own. This broker didn't bother to advise his client and they didn't bother to get the simple permit that cost a few bucks. In the interim, a new rule went into effect requiring an EPA environmental impact study before issuance of a permit, requiring months of time and a few thousand dollars. Needless to say, my buyer walked.

If the MLS system allows attachment of these documents to the listing, either for public viewing or for buyer agent access, it really helps everyone concerned to have them there in PDF format. The format is important, as it is better to have them saved in a way that 98%+ of all computers can access them. When that buyer and their agent is mulling over making an offer on a Sunday afternoon, it's great to not have them postpone that decision until Monday because they have a question about restrictions or something else that could have been documented with the listing.