How would you like to master your property development market? Australia’s Billion Dollar Property Developer, Bob Andersen, shares his expert tips.
Hi everybody! Bob Andersen back again talking about property development.
One of the things I recommend you to do when you’re getting out there is getting to know your property development market. It’s so important to understand the market when you’re developing. One of the best things you can do is to go to any open townhouse or an open apartment – whatever it is. It’s when you go to a finished project, it’s on the market and the agent has opened it up for inspection, that’s where you want to go.
You want to see what other developers are doing and you want to see whether you should replicate some of the things they’re doing or maybe not do some of the things that they’re doing wrong. And it’s better to do that than to actually go and look at a finished product and have an opportunity to talk to the marketing person about it. That’s what you need to do. So, my recommendation is, get out there on a weekend and have a look at other developers’ product.
So, what do you need to do? Find some open townhouses. What you need to do is feel the roof so far here and one of the most important things you’ll ever do is when you make your first contact with the agent. This is what I want you to do, I want you to go out and greet the agent and say: “Hi, how are you doing?” and so and so. “I’m a property developer. I’m actually not here to buy today but I am always looking for a good real estate agent to sell my property and I’m always interested in what other developers are doing.” Just open it like that.
What you’ve actually done is you’re telling you’re not here to buy. And what that means is that, the whole buying persona is off and will not try to sell you stuff. Now, there is another connection here. There is another potential relationship starting and that’s between the agent and developer. It’s a very different way because they will be very open on what they say about this property because you are not there to buy it. So, that’s what you do. That’s the introduction and it’s very important you do that upfront.
Another thing you do is, if the agent is busy with something, just stay in the side, just wander around or when you are talking to them, this is very important, when you are talking to an agent and a buyer comes, just excuse yourself because they’re really there to sell and they’ll love you for it. You say, “Hey, look. It looks like it could be a buyer here, I’ll just slip aside, I’ll just have a little bit of a look and I’ll get back to you shortly as soon as they’re gone. Good luck.” And you just walk away. That’s important because what they are doing is they’re talking to you, they know you’re not a buyer and they’ll be seeing a buyer and they’ll go, “I wish he goes away. I want to sell something.” So, just do that.
I tell you what, nobody knows more about the property development market, what people are, who they are, what they are buying than the real estate agent. This real estate agent, it sells you project because you have a project. That’s important. These are sorts of real estate agents you need to talk to. And some of the questions you can simply ask is, “How long is this property being on the market? Which one is for sale and which one is not?”
Let’s just say it’s a six-pack and let’s say four for them are being pre-sold but there are two left. So, the development is finished for these two others on the market and they’ve opened up and you can say, “Look, I see four have sold and these two haven’t. Why is it that these two are the last to sell? Why is that?” Because it could be a good reason. It could be perhaps bedrooms are a little bit smaller in these two, it could’ve been a bit of buyer resistance to something.
Now, the point is, the agent is going to be quite open because you’re not there to sell it to you. They are sellers but not to you. You’re not there to buy and so they will be quite open. They might say, “The two bedrooms in these particular units, the second unit is quite small. It’s really a case study and we’re getting buyer resistance.”
What they mean in another way is, when you do a development and I’m selling it, make sure the bedrooms are big enough. And there’s a question you can ask. You can say, “Look, the standard finish here, the benchtops, the ovens, the cooktops, the tops, all the others, is this standard finish right on the money? Is it what the market is looking for? Is it a little bit over the top or is it lower than the market?” Because that’s important too.
In fact, ask the agent for spec sheet. They have a sheet of all the different specifications that are in there. Things like benchtops, the drawers, the tops, the ovens, the microwave, the dishwashers, all those sorts of things will be spelled out on a sheet. That’s what you need to keep because sooner or later, you’re going to have to specs up your apartment or your townhouse, whatever it is. It’s important to understand what other developers are doing in your target property development market.
And you say, “Who built this? Who’s the builder? Are they a good builder? Do they build for other people? Do they build for developers? Do you know them? Do you like to build with them? Does the builder build much around the area? Who is the builder?” It might be an opportunity and you can build it this way. “Any architect? Who’s the architect? What do you think of the architect? Mr. or Mrs. Project Market, what do you think? What do you think of their designs? Are they good or does the market like them? Are there sort of feedback you’re getting from the market for the design?” There’s an opportunity there and get connected perhaps with a good architect.
You’re learning a lot. You’re learning a lot about the property development market, you might pick up a good agent, you might pick up a builder, and you might pick up an architect or simply go on and have a look. And you’ll see development sorts as well as just finished projects.
Now to tell you something, an agent makes a lot more money at selling a finished project than they do if they’re selling this site. What they get commission selling a site for townhouses is a lot less than what they get as a commission for selling the four townhouses. So, as a result, a lot of agents either themselves, and often the agents that sell your projects, either they themselves sell sites of somebody in their office who sell sites because that’s a great way getting a leg in the door for selling project. Where the real money is where the commission is. So, ask them, do they sell sites? Do they have any sites in the property development market at the moment? There is so much you can tell. Ask them what are the good points? What are good design points and the not-so good points here?
It’s all about you understanding the property development market, understanding what good design is, what not good design is, meeting agents, perhaps getting a builder and perhaps getting an architect, and what you’re going to do and it’s very important too is, to get back in touch with an agent, agents are very busy people. It’s quickly that you’ll back at the end of the queue if you don’t stay in front of the line.
So, what we all do, let’s meet them on Saturday. Next Thursday afternoon or perhaps Friday morning, ring the agent. Just a short call. It will only take a minute. Say, “How are you doing? My name is Bob Andersen, you might remember I sat in line last Saturday morning, I’m a developer. That’s me. That’s right. A good looking guy. How did you go? Did you sell any of those?”
They might say, “Oh yes, look, I sold Unit 6.” You say, “Great. How much did you get for? What was the least price? How much did you get? What’s the contract price?” It’s a good opportunity to look at selling price and asking prices and how I can build this bond and congratulate them.
Just say, “Well done! Look, that’s what I need now. I need a good agent to sell my stock. Oh, by the way, you can’t sell anything for me until you get new site. By the way, many sites are coming up this week. I know you’re just around me but if there is anything coming up, any development of sorts, not yet? Keep me in line because as you know, I’m really looking for a seller or a good developer and I need a good agent and you got me just what I need to sell so let’s stay in touch. And by the way, have you got any open townhouses or any apartments this weekend? Whereabouts are they? We’ll catch up there. Okay, thanks for your time, I’ll see you then.”
So, these are the sorts of things. Can you see the enormous amount of information, the feedback, the property development market knowledge that you can get? And it’s just talking to one of these agents on an open townhouse. It’s very important and a great thing to do. So, get out there, have fun. Enjoy yourself and put yourself in for a few open houses.
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