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What is Real Estate Due Diligence?

Due diligence in Austin, Texas involves a concerted effort to discover, and analyze relevant information when a motivated Buyer is pursuing a real estate purchase.  The data includes both disclosed and non-disclosed information.  Discovering this level of detail enables the Buyer to make an educated, reduced risk, “Buy or No Buy Decision”.

The following is a list of the variety of issues that need to be considered when doing Due Diligence on a Real Estate project in Austin.

  • Where is the property Located and how does this Location work for the intended use?  Other Location related issues include:
    • How is the property Accessed?
    • How Visible is the property?
    • What is the Existing Land Use of the property?
    • What are the Nearby Land Uses?
      • What other Land Uses Exist near the property
      • Are any new Land Uses proposed near the property?
      • Are the other area Land Uses Compatible with the property?
    • Is there an Existing Driveway to the property?
    • What is the impact of the area Traffic to the property?
      • What are the Area Traffic Patterns?
      • How do these Area Traffic Patterns impact this property?
      • Is the property located on a Primary Route?
  • What Jurisdiction(s) is the property in?
    • What City or City’s ETJ or County is the property located in?
    • Is it in a Water Quality Recharge Zone?
    • What Storm Drainage Area is it located in and /or what does it drain to?
  • Applicable Ordinances
    • What is the property Zoned and can it be improved as planned?
    • What Entitlements will be required in order to improve the property as planned?
  • Is there an existing Survey and if so review it as soon as possible?
    • Are there any limitations to development that are apparent from reviewing the survey?
  • Is the property Platted or will we need to file a plat?
  • Is a Title Commitment available for review?  From a review of the Commitment are their issues with:
    • Title to the property?
    • Easements on the property?
    • Restrictive Covenants on the property?
    • Encumbrances on the property?
  • What are the property’s Physical Characteristics?
    • What kind of Topography is present?
    • Are there Wetlands, Caves, Critical Environmental Features present?
    • Is the property located in a Floodplain?
    • Is existing Storm Drainage located on the Property or will Storm Drainage improvements affect the property when developed?
    • Is there a Phase I Environmental Site Assessment available for review?
      • If available are there Environmental issues to be concerned with?
      • If not available will my Lender require me to obtain one?
    • Is there a Geotechnical Report available for review by my engineer, contractor?
  • Are there Utilities available to the Site?  (* Most Important)
      • *Water
      • *Wastewater
      • Electricity
      • Natural Gas
      • Telephone
      • Cable Television
      • Internet Service
    • What are the costs of tap fees and or Impact Fees to connect the utilities for service?
    • Will any of the utilities require cost to make them available from an offsite location in order to serve this property?
  • What are the Current, Local, Real Estate Market Conditions that are likely to impact the intended use of the Property?
  • Is there a Preliminary site layout available from a Civil Engineer or should we have one done?
  • Should I have and engineer or contractor estimate the cost of improvements to the Project?

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1 ping

    • Dev on August 17, 2017 at 6:17 am


    I am considering to invest in a land parcel in Austin,Texas. I am planning t construct a hotel property on the same. We are about to sign the PSA and enter the due diligence period in a few days. Can your firm help me with the due diligence process?


  1. I’d suggest speaking to Bill Faust, The Faust Group at 512 923-2523.

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