A due diligence check, often just called “due diligence” for short, describes a careful examination of the purchase of real estate or company investments. During a due diligence review, strengths and weaknesses as well as the corresponding risks of the property are determined. These factors play an important role in determining the value of the object being examined. Due diligence is usually initiated by the buyer. The term “due diligence” stands for “careful examination”.
A due diligence investigation into a property should transparently explain all relevant aspects in the event of a change of ownership. Due diligence also makes the potential of a planned real estate or real estate company transaction transparent. Often a property is wholly or partially held in a specially designated company, the business purpose of which is nothing else.
The due diligence is carried out according to your needs and can be divided into different analysis areas, which are listed below as examples and in extracts:
- Financial Due Diligence
- Legal Due Diligence
- Tax Due Diligence
- Technical Due Diligence
In a real estate transaction, each side usually has its own mandate: the real estate buyer puts together a due diligence team and so does the real estate seller.
The composition of the advisory team is based on the main focus of the due diligence. In addition to real estate specialists, the teams consist of specialists such as architects, civil engineers, geologists, auditors, lawyers, tax consultants, and IT specialists.