Throughout our professional trajectory and throughout Spain we have verified that in numerous occasions the purchase and sale operations are carried out with completely deficient and unreliable information. Following good practices, we have always mentioned these risks in our reports. And the truth is that, in a high percentage of cases, the lack of information detected has been penalized with a minimum of 5% of the purchase value of the asset, depending on the market cycle where we were and the type of missing information.

Lack of information is one of the most important risks in real estate transactions. Therefore, it is essential to request all kinds of data not only from a legal point of view but also from a technical point of view. If we cannot obtain them directly from the seller at the moment of the acquisition, it will probably cost us a lot of time and money to find them.

The most important information from the technical point of view is, in general, that which has to do with the project, the licenses and, in the case of existing buildings, the guarantees. In the process of purchasing operations we repeatedly encounter the following situations:

  • Documentary disorder: it is difficult to access the data we are looking for.
  • Lack of coherence between documents: data and documents contradict each other.
  • Lack of precision: the data we are looking for is not available.
  • Unavailability of information on projects, permits and works carried out (in case of existing buildings).
  • Unavailability of OPEX information: it is unreliable and not aggregable.

Many sellers are not aware that the lack of control in the management of documentation generates distrust and loss of time and opportunities. Properties that do not have reliable information have their sales value reduced by 1 to 5%.

Buildings can be understood as a set of data. These serve different purposes both externally (in projects and works) and internally (in control and planning), but the most important thing is that these data allow more accurate and realistic decisions to be made. For this reason, we have recently concentrated our efforts on remedying these situations by initiating several processes of digitalization and ordering of documentation for clients. For example, we have been able to detect important differences between surface data or to identify elements that could be industrialized. In any case, the digitalization of data allows us to have:

✓ Organized and reliable information.

✓ Detailed knowledge of the building and those elements available for improvement with their associated costs.

✓ Management control in the case of carrying out works.

✓ Organized information, so that, in the case of selling the property, we will only have to give access to potential buyers to analyse it.

✓ Possibility of extracting information in real time for decision making.

 

The following is a brief example of the basic information that we normally request from sellers in order to perform a Technical Due Diligence on an existing property:

  1. Project and plot information
  2. Technical projects
  3. Plans and installations
  4. Licenses & Permits
  5. Other contracts

In the case of projects currently under development, the analysis will be based on available project information.

In short, organized and digitalized information has a great potential to increase the heritage value. This process, associated with a building audit, costs approximately €3 to €5 per sqm. However, the penalty for the lack of documentation can represent a reduction of 1 to 5% of the sale price. The advantages of making an effort in this regard are clear.

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