Commercial Property Inspection

What is a Commercial Property Inspection?

Commercial Property Inspections, or, “Property Condition Assessment” are a major part of real estate transactions. They provide an opportunity for buyers to identify any major issues with a property before closing. But what exactly are Commercial Property Inspections? And, when and why should one be done?

Property condition assessments (PCAs) (also known as the property condition report, or PCR) are due diligence projects associated with commercial real estate. Commercial property and building inspections are important for clients seeking to know the condition of a property or real estate they may be purchasing, leasing, financing or simply maintaining. Commercial building inspectors generally follow industry accepted guidelines of ASTM E2018 or the International Standards of Practice for Inspecting Commercial Properties (ComSOP).  These commercial inspection standards help both the commercial building inspector and the client to understand the scope agreed to for the inspection, including the systems or areas to be inspected, and is used as a guide to develop said scopes and procedures. Often they are done as part of a property transfer and are done along with a Phase I Environmental Site Assessment. PCAs are not to be confused with facility condition assessments, which are similar in nature but serve a different purpose.

Depending on client needs or accepted risks, and property types, some inspections can require the involvement of specialists, and some can be done by a general commercial building inspector or engineer. Each varying degree of review or assessment will involve various costs and time frames.

Once the PCA is completed, a written report is compiled and delivered to the client within an acceptable time frame. The report may include such items as concerns observed, recommendations for repairs or further inspections, opinions of the likely cost of future capital projects, and Americans with Disabilities Act (ADA) compliance surveys.

Why get a Commercial Property Inspection?

A Commercial Property Inspection usually takes place right after the seller accepts an offer from the buyer.  After the commercial property inspection is all done, the inspector will be available to answer any immediate questions or concerns.

Because Commercial Building Inspections are each unique and dependent on multiple factors, scheduling a property inspection can usually be done in less than five minutes by calling us and having the property information available. We’ll take the property information over the phone and do a preliminary data pull from multiple resources. Once we’ve gathered enough information, we’ll then get back to you with a proposed invoice and timeline for the project.

To schedule a Commercial Property Inspection, aka. a “Property Condition Assessment,” or simply get more information, Call Now:

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What are the benefits of our San Diego Commercial Property Inspection?

A Commercial Property Inspection is a relatively inexpensive way of determining the current condition of a property before making an offer on it, or, often times after your offer has been accepted, but before the contract is finalized.

The building inspector is similar to a general practitioner in that he has a broad knowledge base on many of the systems and components that comprise the average house. He or she is trained to assess the overall condition of most if not all of these major components and either demonstrate they’re in good working order, or in some cases, in need of further review by a specialist.

They will take pictures or video clips of any issues that might affect the value or function of the house such as leaks, mold, electrical issues and any potential structural damage.

What does a Commercial Property Inspection include?

The inspector will also test various components of the property’s electric wiring, any appliances, the visible plumbing systems, the condition and age of the major systems such as HVAC and water heaters. Once they assess these major items, the condition is explained verbally and in writing to the buyer and the buyer’s agent.

Scope

PCAs utilize building diagnostics to identify problems, but diagnostics go further to determine solutions and predict outcomes to the found problems. A PCA covers eleven major areas:

1. Building site (topography, drainage, retaining walls, paving, curbing, lighting)
2. Building envelope (windows and walls)
3. Structural (foundation and framing)
4. Interior elements (stairways, hallways, common areas)
5. Roofing systems
6. Mechanical systems (heating, ventilation, and air conditioning)
7. Plumbing
8. Electrical systems
9. Vertical transportation (elevators and escalators)
10. Life safety, ADA, code compliance, air quality (fire codes, accessibility, water intrusion, mold)
11. Optionally: site-specific testing, like infrared thermography for energy loss, air leakage, roofing and building envelope moisture intrusion

The site inspection should be a thorough and representative picture of the structure and above mentioned building systems. For larger buildings, a general rule of thumb is to view 10% of the building; however, depending on the structure, floor plan and building systems, this may not be enough to afford a representative picture. The report should include a narrative summary of the building type and condition, and cost tables of the immediate and long-term expenses of the building maintenance.

When should a Real Estate buyer get a Commercial Property Inspection?

Typically the Commercial Property Inspection is scheduled immediately following the acceptance of the buyer’s offer.  Commercial property and building inspections are important for clients seeking to know the condition of a property or real estate they may be purchasing, leasing, financing or simply maintaining. 

Value proposition and users

The users of a PCA may include a seller, a potential buyer, a lender, an investor or an owner.

The reports may be of use for:

• Negotiating the purchase price of a property (buyer)
• Capital or strategic planning (an owner)
• Loan approval (a lender)
• Triple Net Lease (NNN) (leasee/leassor)
• Predictive/preventive maintenance
• Insurance evaluations (an owner, insurance agency)

Protect Yourself by Including Commercial Property Inspection in Your Purchase Offer

Property buyers need to protect themselves from unknown problems in the home they are purchasing. One way of doing this is by including a Commercial Property Inspection contingency in the purchase offer, which means that if any grave issues are found during an inspection process, they have the right to cancel the agreement or negotiate on repairs.

The Building Inspector will present all of these findings to you, and once compiled along with any other inspections that may have been done on the property, like termite or Roof Inspections [and an appraisal], the buyer will have a significant understanding of the current condition of the property and will then be best suited to make an informed decision on how to proceed.

Often times the issues are smaller and the home inspector may also provide advice for solving some issues.  If there is a significant issues or defect, the buyer can usually negotiate a reduction in the purchase price with the seller.

What to expect from the report

After your Commercial Property Inspection, you’ll receive an walk through and verbal overview. During this time [or any time after receiving your report] our home inspectors may also address any of your questions or concerns regarding different items you’ve noted.

Then later, usually within 24 hours, you’ll receive a much more detailed and objective written report listing what is in acceptable and in good condition, but also it will highlight and identify any defects within specific systems or their components as observed by our team of IN-DEPTH Inspectors.

After an inspection, can a buyer back out?

Yes, most likely they can. But it has to be written in your offer. Remember, no house is perfect. You should expect the unexpected and be prepared to find a few things in the report you had not considered.

If the defect/item is severe enough, the buyer can usually receive their deposit back in full.  If they choose to cancel the contract with the seller within the inspection period, which typically lasts for around 10 days, then the agent will need to submit the proper paperwork within the contingency period.

As 10 days is the usual, it’s not a lot time. Therefore experts recommend that buyers don’t wait, decide quickly and act promptly.

More often then not, the problems uncovered are not a deal breaker and most people usually move forward with what’s called a “repair request” or a request fora credit against the price.

Now it’s time to discuss the options with your agent. If you’re buying a home, it’s important to know what the seller is willing to do.

The buyer can also ask for certain repairs if they want them as part of the contract. For example, if there are problems with electrical wiring that could be dangerous, then your agent may suggest asking for those wires to be repaired before closing.

Alternatively, the buyer can ask for a credit in the asking price to account for the added cost to have it repaired after closing.

Sellers may be willing to pay for repairs if they’re needed. It can also happen that the buyer and seller agree not only on who pays, but how much, or what kind of credit is given in lieu of payment towards the repairs.