Request a proposal In the field. In the documents. On the record.Agency physical due diligence
Property condition and capital-needs reporting prepared around the applicable Freddie Mac multifamily scope, forms, lender requirements, and transaction timetable.
Request a proposalIn plain terms
Freddie Mac’s Property Condition Report requirements are organized in Guide Chapter 62. The lender must confirm the applicable product and any additional instructions. The assessment needs to explain both what was observed and how the resulting repair and reserve conclusions were developed.
Scope, requirements & reporting
The published guide calls for consultant-selected observations across all buildings and unit types. Its minimums include all commercial units and at least 10% of residential units overall, including at least half of vacant units and half of down units. Greater variation in down-unit conditions can require additional observations. Check current product-specific provisions before arranging access.
A percentage alone does not explain the condition of a mixed-age property. Identify major renovations, changes in equipment, recurring leaks, structural concerns, and unusual materials before choosing the sample. Reconcile quantities and replacement ages with management records and photographs.
The report must address applicable material and system concerns, not merely list equipment. Evidence of a recurring defect may call for specialist investigation or a more detailed repair approach. State whether the cost assumes repair, selective replacement, or replacement throughout the affected population.
Responses to underwriting comments may change a repair classification, quantity, timing, or reserve assumption. Update the affected narrative and schedules together. A response letter that contradicts the final report leaves the owner and lender with competing versions of the same finding.
Decisions supported
Which physical conditions affect underwriting or closing?
What immediate work and future replacements should be accounted for?
Does the deliverable address the applicable Freddie Mac and lender requirements?
What additional information or specialist review is warranted?
Typical scope
The final scope follows the property, transaction, program, client requirements, and information available. Typical elements include:
Process
Confirm the property or project, intended use, reliance parties, schedule, available information, and required deliverable.
Review the documents, identify gaps, and coordinate the people and access needed to complete the scope.
Perform the observations, analysis, interviews, and specialist coordination called for by the assignment.
Separate material findings from background information and state the basis, limitations, open items, and follow-up clearly.
Common assignments
Physical due diligence and reserve reporting for an agency lending transaction.
Updated property condition information for the proposed loan and ownership plan.
A consistent KOW workflow across recurring Freddie Mac assignments.
Frequently asked
No. Their published instructions define samples differently. Confirm the lender, product, and applicable guide before scheduling access; do not reuse another agency’s inspection checklist.
Chapter 62 calls for inspection of all commercial units. Mixed-use buildings therefore need tenant coordination beyond the residential sample.
Additional observations or supporting investigation may be needed to establish the extent of the problem and a supportable cost. The minimum is not a reason to stop when the evidence remains unclear.
No. An existing-property PCR evaluates condition and capital needs. Construction monitoring evaluates ongoing work and funding. A transaction with rehabilitation may need both, with their scopes and assumptions coordinated.
The report follows the applicable Freddie Mac program and lender requirements in addition to documenting observable condition, priority repairs, expected replacements, supporting information, and material limitations.
No. Program, transaction, form, reliance, specialist, and lender-review requirements can differ. KOW confirms the current assignment requirements before the scope is finalized.
Replacement needs are organized over the required analysis period using observed condition, available records, expected useful life, stated cost assumptions, and the applicable reporting framework.
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