If you’re looking for a specific type of development property, then yes, it is important to establish relationships with local agents.
In search of a townhouse development project 10-odd years back, I introduced myself to agents at opens, and explained my specific requirements (under $500k budget, corner block, dual occupancy, etc). Of course, as a result, I got hammered with emails and calls, but before I knew it, I became an expert on the local area. I was always honest with my feedback, and agents respected my straightforwardness, and became forthright in turn.
Eventually, an agent contacted me regarding a deceased estate, where the trustees wanted to sell quietly, quickly, and without a fuss. I was all over it, and made sure to inspect the property the same day. That’s a lesson buyers often learn the hard way – be quick to jump on opportunities, because good ones don’t last.
Immediately following my private inspection, I worked through my feasibility. The next day, I visited the site quietly with my draftsman, and talked through restraints, options, risks, etc.
The next day, I wrote an offer for $410,000. I put it in writing, with a clause that it would expire within 24 hours. The vendors wanted no fuss, and neither did I. Of course, I wanted to put a bit of urgency on them, and keep them from showing the property to more people.
The agent called me (on speakerphone) at the 23rd hour and explained that another offer had been made. I stayed firm on $ price, but knowing the family was likely listening, offered complete flexibility with other terms. The deceased’s son wanted to rent for 6 months after the sale, and another sibling wanted to transplant some much-loved rose bushes – my genuine openness sealed the deal.
I got the place on a 90 day settlement and, in a nutshell:
– worked with an experienced draftsman to attain Council permissions for two 2-bed, double story townhouses
– managed a cosmetic renovation of the existing dwelling, and entered into a fixed price building contract for the townhouses
– sold the renovated weatherboard at auction, immediately after conditional planning approval
– sold both new townhouses off-the-plan the next financial year, about half way through construction
– achieved over $220,000 in gross profits (a 150%+ return on equity)
Many learnings came from the project, but the most important was to repeatedly engage with local agents at opens, and be absolutely clear about my desired property characteristics.
You don’t just want to go on an automated database mailing list. When an agent is interviewing for a vendor’s listing, you want them to speak about you – a serious buyer who they can call immediately to explore an off-market sale (no advertising, opens, etc). This is a win-win-win for the seller, agent, and buyer.
Some of the best development properties never hit the market.