Key Takeaways
- Confirmation bias causes investors to dismiss red flags that contradict their desire to acquire—assign a devil's advocate.
- Bank statement reconciliation is the single most effective financial DD control.
- Sewer scoping ($250-$500) and structural engineering ($2,000-$5,000) prevent the most expensive physical DD surprises.
- Every DD failure traces to a skipped step—the checklist exists to prevent precisely these omissions.
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Test Your Knowledge
1.What cognitive bias causes investors to dismiss DD findings that contradict their desire to buy?
2.What is the single most effective technique for detecting income fraud during financial DD?
3.At what building age should you automatically engage a structural engineer during DD?