In today’s blog post, let us give you some insight into what a Property Condition Assessment is and why it is important.
Property Condition Assessment (PCA) is an evaluation of the physical condition of a real estate property. It is the process of developing a comprehensive analysis of the condition of the Civil, Architectural, Structural, Fire-Life Safety and MEP systems of a commercial, residential or industrial property.
A Property Condition Assessment is the most important audit a property owner should rely on before making a major property investment.
But what if the property owner is a large investment company with multiple properties? How can companies owning multiple assets know the true value of their assets to be able to find appropriate investments?
One of the most crucial aspects of PCA is its importance for large companies who own multiple assets, especially those running pension funds or mutual funds.
Many large companies owning multiple assets work by collecting money from the public as investments on their assets, in the form of stocks and bonds. An accurate assessment of their properties and other assets is highly important in order to know the true value of their assets to be able to present to the investors and collect appropriate funds.
In the case of Asset Owners with large property portfolios, even minor defects can cost a huge sum of money given the number of properties they own. That is why it is extremely important for such companies to regularly conduct PCA to make sure they are financially prepared and to secure the appropriate investments.
Just as important it is for large companies and investors; it is also crucial for individual homeowners to conduct PCA. How else would you know if the construction and maintenance quality of the property you’re buying is of high standards and worth the price you’re paying?
In case of individual homeowners, PCA is usually ordered as part of the due diligence process when a property is handed over to a new owner. A lender may request a PCA before issuing a loan, or an investor/buyer may request the assessment before purchase.
A thorough Property Condition Assessment should identify physical deficiencies, deferred maintenance, Fire, Health & Safety code violations, poor workmanship, snags, physical and financial risks, and liability issues in a property.
After the completion of a PCA, you will receive a Property Condition Report. This report will give you a list of all the issues that are found in the property along with the risk-severity level and recommendations to repair it. This is the most important aspect of the PCA. This report enables you to estimate the cost needed for maintenance issues and thus evaluating the overall cost of the property.
A PCA can help in the following ways:
- As an Asset Owner, Facilities Management Company or company with large property portfolios:
- you can undertake Predictive/Preventive Maintenance Planning.
- you can plan for capital, strategic & upgrades for your projects.
- As a Buyer or Property Owner:
- you can negotiate the purchase price of a property based on its actual physical condition determined by an independent third party.
- you can determine the need for repairs and replacements.
A Property Condition Assessment can save you money in more ways than you think and give you the reassurance to go ahead with your dream property or securing the appropriate funds for your investment.