Property Due Diligence Checklist: What to Check Before You Exchange

Most buyers understand that due diligence matters. In theory.

In practice, the first things to get compressed when a deadline tightens are always the same five things — the building inspection, the strata review, the second read of the contract, the call to the council, the independent comparable sales.

The reason is structural. Due diligence has an asymmetry problem.

The cost is visible. The benefit isn't.

You can see the $500 invoice for the inspection. You can't see the $80,000 crack in the slab that inspector just stopped you from inheriting. You feel the cost of slowing down. You don't feel the price of the mistake you didn't make.

This post covers what to check, why it matters, and how to use due diligence as both protection and leverage. It's the framework I use with every Pomona client on Sydney's North Shore.

The asymmetry problem

Due diligence has the same structural shape as insurance. The cost is felt immediately. The benefit is only ever felt as the absence of a catastrophe.

That's a hard sell to a buyer staring at a $4M contract with three days to exchange. The $2,000 in checks looks expensive. The $200,000 mistake the checks prevented never shows up on the ledger.

But every high-consequence industry solves this the same way — with structure that doesn't go optional under pressure.

Serious companies don't buy other companies without a financial audit. Serious patients don't have surgery without a second opinion. Pilots don't skip the pre-flight checklist, even on a route they've flown ten thousand times.

None of these professionals expect to find a problem. They check because the cost of not checking is catastrophic.

Property has exactly that shape. Five to seven figures of capital. One signature. Usually under time pressure. The variables that most affect the outcome — contract conditions, structural integrity, strata health, zoning, comparable sales — are all knowable before exchange. Usually for a few hundred to a few thousand dollars.

The reframe

Due diligence is not a fee. It's an insurance premium paid in attention instead of money. And on the largest asset most people ever own, it's the cheapest premium on the market.

The five-check checklist

Before you exchange, run these five. They cover the catastrophic-risk surface area for almost every Sydney property transaction.

1. Building and pest inspection

Independent. Not the vendor's report. Not the "complimentary" inspection arranged by the selling agent. Your inspector, working for you.

Look for structural movement, water damage, roofing issues, evidence of past pest activity, and indoor air quality concerns.

2. Strata records (apartments and townhouses)

The minutes and financials tell you what the body corporate hasn't told you. Look for special levies discussed but not yet passed, capital works funds below industry benchmarks, ongoing disputes, and repeated waterproofing or façade issues.

A clean strata report is worth more than a glossy brochure. A messy one is worth more than the entire building inspection — because it tells you what's coming.

3. Contract review by a property lawyer

Not a generalist solicitor. Someone who runs property conveyancing weekly. The contract's standard clauses are negotiable. So are the special conditions. Get them reviewed and amended before exchange, not after.

4. Zoning and council plans

Pull the s10.7 (formerly s149) certificate. Check the LEP and DCP. Understand what can be built next door, what's already approved, what's on the council's pipeline for the street and the suburb.

A view, a quiet aspect, or a private rear yard can all be lost to a single approved DA next door. Knowing the pipeline before you exchange means you're buying with eyes open.

5. Independent comparable sales

Not the selling agent's selection — yours. Five to eight sales in the last 90 days. Adjusted for land size, orientation, and street position. This is both due diligence and negotiation prep.

Due diligence as leverage

Most buyers think of due diligence as a defensive check. The strongest buyers use it offensively.

A buyer with independent evidence of an issue can move the price, change the terms, or walk away with conviction.

A buyer without evidence is negotiating on vibes. Vibes don't survive contact with an auctioneer. They don't survive the private treaty room either.

When the building inspection flags a $40,000 waterproofing job, that's a specific number you can negotiate against. When the strata minutes mention a pending special levy, that's a specific cost the vendor either absorbs or you walk. When the comparable sales show the asking price is 8% above market, that's a specific anchor to hold.

Due diligence is information. Information is leverage.

What buyers most often skip

The five checks aren't always skipped equally. These are the most common gaps I see.

The 72-hour rule

If the whole due diligence process takes you 72 hours and $2,000, you've bought the best-priced insurance on the market.

Three days. The price of a long weekend away. That's the cost of certainty on the largest asset most people ever own.

If a deadline tells you you can't afford 72 hours, that's almost always a sign you should walk. Real urgency from a real vendor is rare. Manufactured urgency from a selling agent is the norm.

Slowing down is not the same as losing.

Free resource

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The exact checklist used on every search — covering contracts, building inspections, comparable sales, zoning and cashflow. Free, no strings.