A property condition assessment (PCA) is a type of evaluation that is commonly utilized in real estate transactions. The goal of the assessment is to determine if the property currently complies with minimum standards set by local jurisdictions, as well as identify any areas of improvement that are needed in order to maintain or increase the market value of the property. This means that a property condition assessment may occur when attempting to sell property, or when there is a need to ensure that a piece of real estate used for business purposes is up to local codes before that business can renew a license to operate.
When property is offered for sale, a property condition assessment is usually ordered. Depending on whether the property is classed as residential or commercial, slightly different standards may apply. In both scenarios, the goal is to determine what if any repairs or improvements must be made before the property can be sold. For example, if a house is wired with an antiquated electrical system that is not grandfathered into local building codes, the owner may have to bring the wiring up to current standards before the home can be placed on the market for sale. In like manner, a commercial building that has been under the same ownership for decades may require some upgrades before the property can be offered for sale to new owners.
The cost of a property condition assessment will vary, based on the type of property involved and the complexity of the assessment itself. Assessments for residential properties are often less detailed and can be managed with a lower cost. Commercial facilities tend to be more expensive, especially if the property includes multiple buildings spread over a large area. While expensive, the cost of the property condition assessment is often offset by not incurring various types of fees and penalties that would otherwise be incurred. In addition, the identification of items that need repair or upgrading can make it easier to improve the property and command an asking price that easily covers the cost of the assessment and still allows the owner to generate more profit than would have been possible otherwise.
Many jurisdictions provide specific guidelines for conducting a property condition assessment, based on the local property standards that apply. It is not unusual for only certified appraisers and other real estate professionals to conduct these types of property evaluations. Unless the individual or firm handling the assessment is recognized by the local jurisdiction, the results of the evaluation will be of relatively little value to the buyer or the seller.
