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In essence, a Property Condition Assessment (PCA) is to commercial property what a home inspection is to residential property. According to The American Society of Testing Materials ASTM E 2018-08, a Property Condition Assessment may be defined as: the process by which a person or entity observes a property, interviews sources, and reviews available documentation for the purpose of developing an opinion and preparing a Property condition Report (PCR) of a commercial real estate’s current physical condition.

While most people would never think about purchasing a home today without having a home inspection, many who plan on purchasing commercial real estate property for investment, personal or business use, either don’t know what a Property Condition Assessment (PCA) is and/or aren’t given the opportunity to consider a PCA before purchasing a commercial property. The problem with this scenario as it affects most people is that they have literally done nothing to help lessen the uncertainty and risk often associated with a typical commercial real estate transaction.

On the other hand, the advantages and benefits of having a PCA when planning to purchase a commercial real estate property can be very gratifying and normally far outweigh the cost thereof. Just to name a few, a PCA performed at a high level of due diligence and inquiry can often:

  • Help to make an informed purchase decision

  • Act as an effective negotiating tool

  • Serve to reduce the purchase price of the property

  • Place the onus on the seller to make and pay for repairs

  • Allow one to back out of the deal depending upon the property’s physical condition

  • Help to anticipate repairs down the road

  • Help to develop both a short and long term preventative maintenance program

  • Prevent one from purchasing the money pit!

However, like home inspections, not all PCAs are created equal, meaning ‘You Get What You Pay For’. This being the case, if you are altogether unfamiliar with PCAs or have ever been on the receiving end of a PCA gone bad, then you need to learn a little bit more about PCAs in order to become (more) discriminating in who you hire since the end result is only as good as the level of PCA provided.

More on the Baseline PCA’s and what constitutes a PCA performed at a higher level of due diligence and inquiry in coming articles.

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