Don't Sell Yourself Short: Smart Strategies Against Developer Tactics
The property and development market is currently experiencing a surge in activity due to the introduction of NSW Housing Reforms this year, which are aimed at addressing the housing crisis.
The NSW Government Housing Reforms include rezoning of land across Sydney especially around train stations. Developers and their agents are knocking on property owner doors in those areas.
Are you getting less money and more risk?
Some owners will be tempted to negotiate directly with developers that contact them directly. This is what developers want because they are expert at acquiring sites and almost inevitably will do better out of the negotiation than the property owner.
Developers often negotiate agreements that shift risks on to property owners, who may not fully understand these risks. Contrary to what some property owners believe, granting developers an option is not a necessity for closing deals. Instead, it often serves as a strategy for developers to minimise their obligations. An option agreement typically allows the developer to choose whether to proceed with the purchase, without giving the property owner any power to enforce the transaction. This arrangement leaves the property owner in a vulnerable position where they bear potential risks without guaranteed benefits.
Image: 29 George St, Burwood before
Seek advice from experts
To effectively counter the negotiation advantages that developers have when acquiring your property, it is crucial to seek advice from experts. These professionals understand developer strategies and tactics, including how developers price properties, transfer risk on to property owners and the methods to counteract these tactics. Their expertise in advising property owners and negotiation is potentially worth hundreds of thousands or millions to individual property owners.
Image: 29 George St, Burwood after
Case study
An investor owned a property in Epping and agreed to sell his property with the adjoining owner and split the proceeds 50:50. We analysed the properties and found the investor’s property was 47% of the combined land area but small differences in the shape of the two properties meant the investor’s property contributed 71% of the combined development floor space.
The 50:50 agreement with the adjoining owner would have meant the investor would have effectively given the adjoining owner an unintended gift of $6.5 million.