Thinking of Selling Your Developable Property?
Discover how you could get a significant price premium over market value

...without the considerable time, money and expertise required...or the risks of developing yourself... or the hassle and costs of selling through an agent

Photograph of Michael Fuller, Founder of Hotspotcentral and Boomscore

Michael Fuller
Founder, Boomscore

Welcome

Hello,

I'm Michael Fuller.

I may have written to you because I believe your property may fit our criteria as a potential development site.

There are also some very specifics reasons why I might be able to offer you a significant premium for your property and I invite you discover how and why?

I encourage you to read this with an open mind as selling to, or dealing with a complete stranger, can be challenging.

I assure you I'm not a real estate agent and my partners and I have had some amazing and mutually rewarding relationships with landowners just like you.


Sunshine Coast Unit Development

Recently we paid some landowners on the Sunshine Coast more than $14m for their homes combined that were independently valued at just below $8m if sold individually as existing houses, albeit, on land zoned for a higher use (high density).

$6million is a significant premium!

We didn't pay them more because the council zoning permitted development. We could have bought similar properties nearby in the same zone for less on the open market.

These landowners soon realised had they chosen to sell on the open market then they would have lost out on a significant chunk of money and that's not to mention the hassle, cost, inconvenience and often emotional toll of this typical sales process.

Most property developers prefer to pay market value and cash for a site

Port Macquarie Land Development

We also recently paid $2.5m for a home in Port Macquarie on a large block of land that was independently valued at $1m less than what we paid.

Now before you think we are charitable philanthropists there is a very good reason we pay more for certain properties.

So why do we offer more than the properties are worth on the open market?

I won't reveal all our trade secrets - we've learnt our lesson with less scrupulous land owners but most property developers prefer to pay market value and cash for a site because the lower price reflects many of the risks they are prepared to move forward with by paying less.

A cash or quick sale may suit those landowners that need to sell or are not aware of their options.

Let me explain...

99% of property owners with developable land forgo a premium for an agent advised straight sale.

Many are persuaded that an auction will get them a higher price than a private treaty sale. Estate agents prefer this because it's less work and it pays them sooner. Understandable, of course.

Unfortunately, many of these less sophisticated agents also are not aware of the concept:

A developer's price for a developer's terms.

In simple terms, the lower the risk attached to the site, the more they pay.

Put another way, the developer pays a premium for certainty.

A developer's price for a
developer's certainty

Too often, with inaccurate advice, property owners want a higher developer's price...

Too often, with inaccurate advice, property owners want a higher 'developer's price' for their unimproved land without understanding the developer's motivations. This higher price expectation is usually set by the agent who has very little understanding of what it takes to get a parcel of land beyond it mere zoning for development.

There are many thousands of parcels of land that are zoned for development but are not developable for myriad reasons.

They are advised that the developer could put townhouses or units or multiple lots on their land and it must, therefore, be worth more than the current house on the piece of land. Not so.

Even in a hot market, a developer has a ceiling before the deal becomes too risky and the profit margin too low.

And this is why our model works so well.

Typical developer questions when evaluating a site

  • Will I get the council development approval?
  • Will the conditions attached to the DA render the project unfeasible?
  • How long will these approvals take? Is the council too busy and will I miss the market or blow out my holding costs?
  • Are construction costs too high and uncertain?
  • Are impending interest rate rises going to dampen buyer enthusiasm and affect end prices and my profits?
  • Will the construction lender provide enough funding on good terms?
  • How many pre-sales will the funders require to 'prove' the local market acceptance for my prices in this location before the provide the capital required?

As a seller, these concerns are meaningless to you, not so?

Well...not really.

Just because your property is zoned for development this does not mean to say it will be profitable. And if it is profitable, a developer will not pay a premium if the risks are still on the table at settlement....UNLESS...

You are prepared to offer certainty.

As a capital partner to many developers, through my various businesses like Boomscore, over the last 12 years, the developers I partner with, and their experience, is far more important than the site specific details.

When they come to me to raise private equity, I want to know how they have addressed all the questions.

When they tell me, "I have arranged plenty of time with the landowner to get certainty on all the matters above", then I'm interested in helping fund the project.

Enjoy the benefit of a developer's expertise, contacts and time to enhance the value of your property without the risk of doing it yourself.


The benefits of selling privately

  • Fast sale without the legal complexities of selling a home with emotion
  • Perfect settlement or rent back terms
  • Removal of agents fees - this alone case save big sums of money
  • Private and Confidential - not everyone wants their snoopy neighbours knowing
  • Safe - no covid spreading open homes or punters stealing your possessions
  • More certainty with more money in the bank
  • No impact to tenants or owner-occupier
  • No marketing costs and having to re-arrange the house for sale
  • Ability to choose and customise terms to suit your needs - timing of capital gains tax for example
  • Flexibility of the deal
  • Potential for JV and some profit upside
  • Potential to own a brand new, low maintenance, more expensive, architect designed home where you live now....with more cash in the bank too.

Why you want to avoid selling on the open market

  • agents commission can be costly and time consuming
  •  few real estate agents understand development and how to shape a deal that works for everyone
  • auctions are a hassle and nerve racking
  • constantly tidying the property for viewings is a hassle
  • dealing with unscrupulous estate agents
  • dealing with amateur 'just-finished-a-property-course' can be very frustrating
  • they have no idea how to price a property with development potential so they believe the estate agent who has no idea what it takes to develop a site.

Example case studies

Every project is different. Every seller that we have worked with has unique needs and circumstances. We listen intently and almost always find a workable solution that benefits everyone involved. More money is not the only motivation.

  • SMALL SUBDIVISION

  • UPMARKET aPARTMENTS

  • JV SUBDIVISION

Single home into 47 house lots

The landowner of this property in Mid North Coast, NSW had been approached for decades by various local developers interested in buying their land. Ultimately they decided to work with us to secure some certainty with council as to how many lots we could get approved.

Initial town planning reports 31 home sites. Even this was looking more unlikely as time went on due to various complexities associated with the site (slope, bushfire and koalas etc). So our initial due diligence was not encouraging and most developers would have walked away and certainly not paid a 'developers price' for the site i.e. more than it's unimproved market value.

Most developers prefer to pay normal market value, because if they are unable to obtain Council approval, they must then sell, which means they don't want to pay the vendor too much due to approval risk

We put together an agreement with the vendor which gave us enough time to obtain a development approval at our cost and structured the purchase agreement in such a way that it removed the approval risk, which allowed us to pay a much higher price to the vendor.

 

A a result we were able to pay more for the land simply because the owner gave us some time.

The land owners gave us 18 months to get council approvals and get some pre-sales for finance requirements. We had to pay out over $500,000 to get the site approved and sales volumes established. Just because council approved the development application there was no certainty around actual sales that could be achieved and in what time period. Crucial to get bank funding approved to then developer the site (roads etc).

 If they had stayed in as a JV partner they would have earned potentially another $2m on the already larger price we paid. If this site was on the market for $1.5m to settle in, say, 30, 60 or even 90 days we would have walked. The best offer they had was $1.8m before they decided to work with us.

Everyone is different

Do you fit into any of these 'life' scenarios? We can work with you regardless of your fears, needs, concerns related to selling your property for development.

Retain a Property on Completion

"I want to continue to live where I am now"

Most owners of units in a body corporate either want to continue to live where they. They love the area and they know the community. In this scenario you might choose to 'swap' your unit for a brand new unit in the project. Some owners don't have the capital to upgrade to a brand new, architecturally designed home. In this scenario, if the numbers permit, you can have the best of both worlds.

Get more rent

"I want to keep my property for rental income and retirement."

One of the best methods of boosting your rental income is to improve the property. Tenants love new properties and will pay more. It's that simple. We might be able to work it out that you do no lose on the rent while developing the property and your new tenants will be delighted when it's completed.

It's my home and I need the cash now

"It's my home and I cannot afford to move out while the project unfolds"

Most owner-occupiers need the money when they sell to buy elsewhere. If you gave us the time to get some certainty on what can be done on the site, we could potentially ensure you had a top quality accomodation (for example) while we either build your brand new home (you keep a property in the project) or we pay you more than the market value.

Do you want to continue to live where you do now but enjoy a much higher degree of amenity by staying on in a brand new home.

Typical questions answered

I would prefer cash for my property

If you need the money immediately then we're not the ideal fit for your needs unfortunately.Your best bet is to sell on the open market and hold out for a cash offer.

The problem with asking for a quick cash sales (for us) is we will have to price in the risks associated with little certainty beyond the initial due diligence period.

We will have some idea of what can be built.
We will have some idea of the demand by end buyers for the end product.
We will have some idea what it will cost to build.

But risk mitigation for us goes a whole lot further and we pay for that.

My point is, like all developer's, we have to factor in all the uncertainty and therefore the risks and factor this into our price. A cash price now means greater risk.

Buying your property off-market gives the owner and the developer more time to work out what each other needs and how to meet in the middle.

Most estate agents want a quick deal so they can be paid their commissions. Only the more advanced agents realise that the land is worth much more when there is more certainty (i..e with a DA and BA approvals, some pre-sales to prove the local market demand and funding secured for construction and settlements etc).

Most developer prefer buying DA approved sites. I know because the software side of our business helps over 1,500 users find and flick DA approved sites to developer's. Few will pay a premium for a raw site with some potential. Potential is ...well...potential and not much else.

In summary, if you need money urgently, cash is king. If you want more for your site (your price) then you will need to give us more time.

In most cases an estate agent will slow down the sale due to their ignorance about the true total costs of the development project and therefore the residual land value (maximum land price to make a certain profit). They usually want to be paid quickly too so they almost always encourage the landowner to take the price with the least terms so the land can settle sooner (and pay them) sooner rather than later.

It's human nature and I don't blame them. 

How much will you pay for my property?

The premium we are prepared to pay depends on many factors. 

I actually need you to tell me what price you have in mind if you were to sell today on the open market.

It's a good idea to get some idea now what the price you have in mind because I don't want to spend two weeks doing my research...it's expensive...only to discover we were always far apart on price.

That would waste everyone's time.

If I pay a premium and then build costs continue to fluctuate wildly then I will make a big loss if I have to sell your site.

If I can get more certainty on sales prices, build costs and what I can get approved then I can pay a premium. I would also save on holding costs as you would save on commissions and all the hassles of selling on the market.

I'll develop my land myself

The very first question to ask yourself is if you have the TIME, MONEY and EXPERTISE to develop your property yourself. You need all THREE in abundance to go it alone. If you have the money then great. But do you want to risk it all? Do you have the time? Developing can be incredibly time consuming and most people with busy lives prefer to partner up with an experienced developer or sell to a developer for a better price.

Then there is the all important expertise. Suggest to any developer that development is easy. I just have to buy some land (or use my own), get council approvals, build and sell. Easy.

Watch their response.

I've been putting investor capital (and my own) into development projects for over a decade, with many different developers. The one thing the successful developer's I've worked with all have in common is the ability to remain calm when things start going very wrong. And they always go wrong. Always. The next trait is the ability to solve complex problems almost daily. I could regale you with stories for days on how many problems you simply cannot foresee actually pop up.

If you want to explore the potential of your site then let me know. I can do a quick site assessment using our very smart AI driven technology that details what can and can't be done and at what cost and total sales. 

My business is not just property development. My partners and I provide data driven property technology systems to developers...about 1,500 of them who assess sites like your all day and every day. When you decide to sell off-market directly with a developer - just keep this in mind....not all are equal.

What are my three main options?

CASH SALE - when we have cash freed up from other projects we prefer to pay cash. Paying cash means we get a better deal on the terms. As the saying goes, "my price, your terms". 

The landowner rarely gets a cash price that reflects the true value of their land if it has development potential because the risks are not fully known, the site yield (number of units, land lots, townhouses etc) are not known until a DA approval and construction or building approvals are done. In essence, if you want a 'developer's price' you need to give 'developer certainty'. You simply can't expect one with the other.

DELAYED SETTLEMENT OR CALL OPTION AGREEMENT - often this certainty can be provided by giving you giving us time to seek council approvals> If you allow us time to get some sales, your price goes up further potentially. You see, these sales prove to the lenders that there is sufficient demand in this local market for our product. How this certainty is provided from a legal perspective is quite basic and a standard legal instrument used by all experienced developers.

Some of our vendor 'partners' have made substantial sums of tax free money by committing to sell in 12 to 18 months. Even in a rising market this has proven substantially more profitable. In a flattening market with higher interest rates? Well, it's the astute persons playbook.

JOINT VENTURE - you might decide to share the profits in addition to a higher price. When you really know the details on how this works, it gets really exciting. In essence, your land stays in your name with all the improvements we have created in both money and expertise. When all the units or houses or townhouses are sold, you share in the profits. Everything is secured by specific legal agreements. Again, you always own your land. We do everything and you share the profits.

CASE STUDY

 We paid $14million to six landowners for 6 homes on the beachfront on the Sunshine Coast. They could have sold their properties to a developer for $8m given the development potential, however a valuer valued them for  less 'as is' being residential homes.

We offered them $14m in return for extra time.

Some of the owners lived there and others had tenants so they were in no rush to sell.

If they had chosen to leave their land in the deal, they would have shared in the $25m profit margin. Leaving their land in would have meant us borrowing $14m less than we had to by saving on interest and better terms due to the lower LVR against total development costs.

We could have used the unencumbered land as security against a loan taken out to develop the property. Most landowners would be very concerned about safety of a structure like this, however, the loan - in this structure - is guaranteed by us, you would be indemnified against any potential loss greater than the value of your site coming into the project. The value is pre-determined by an independent valuation. So there are mechanisms that might seem daunting at first but, once understood, can secure your position but also provide a much higher share of the profits.

Frankly, this is not our preferred option because there is a huge amount of work and skill involved. We also would be sharing a much greater portion of the profits with the landowner for not much more on their behalf other than use of the land beyond the initial extended time to settle.

There are, however, many land owners that prefer a JV arrangement when they do not have the time, money, expertise and relationships to undertake a project themselves.

Why would we choose you as a Developer?

Picking a developer to work with is of paramount importance, particularly if you intend to stay in the project for a share of the profits and the premium price on your land.

My partners and I have over 1,500 developers and site acquisition specialists using our property market research and site acquisition software. So not only do we have considerable experience working with landowners to maximise the value of their land, but we can also - very uniquely - call on a pool of highly experienced developers, countrywide, to ensure your property becomes a highly successful project. 

Most property developers do not have the ideal set of skills and industry relationships for a specific project, of a certain scale, in a particular location - we do.

We are also a highly technology driven company with our own proprietary data-driven technology that helps us ensure the projects we take on are fit for the local market, the market has sufficient depth (market absorption rate of 20% plus)

What if you don't get planning permission (DA approval)?

If the Local Planning Authority refuses to grant us planning permission for your land, then we'll evaluate the reasons for refusal. If the reasons can be overcome, which is typically the case, then we'll use our expertise to carefully devise a challenge against the refusal decision, by appealing to the relevant authorities. We have never not obtained planning consent due to careful selection of the site and pre-lodgement discussions with council, however, we have had some locals take us to the Land and Environmental Court to try and stop our project. They lost.

What if I'm not ready to sell now?

If you are not interested in selling right now, but would possibly consider doing so in the near future, then please contact us now. We can discuss your requirements and tailor a contract to accommodate your timescale. Contact us now to start the planning process.

This will place us in the ideal position to make a purchase at a time that is appropriate for you. In fact, we prefer it that you are not ready now. But with some planning and forethought - you might be ready to sell in, say, 18-24 months by which time you will know the true development value of your property all achieved at our expense, with our seasoned consultants and our time and expertise involved.

All this done for you and you get to share in the upside with no risk. This does not work for someone who has the mindset of 'get a good deal now and settle in 30 days'.

It's for those who appreciate the enormous effort, money and skill required to unlock the value in a property with development potential.

What is an LDA and why is it important?

LDA stands for a Land Development Agreement: a document drafted between a landowner and developer.

In many cases this can include a form of joint venture-project management where the developer takes the project from concept to completion and shares the profits with the landowner after the landowner has received the agreed price for their land.

During the project the landowner retains the land (yes, this is important for the landowner) while the developer deals with, and pays all the costs associated with the council and a range of consultants (bushfire, geo-technicians, quantity surveyor, valuers, architects, town planners,  funding specialists...the list goes on and on. The developer assumes the development risk and may, in some circumstances, use the (unencumbered land) as equity for development funding cost while indemnifying the landowner to the pre-agreed value of the land.

The benefit of this arrangement is the landowner can expect a premium for their land or a larger slice of the profit pie on completion. The developer gets to leverage 'lazy equity' in the land to secure funding to get the development approvals which, in turn, further increase the value of the landowner land.

In essence the LDA ensures all the rules are known by both parties and each of their positions are secured.







Do you want to explore your options?

Please contact me for a confidential discussion. I can also do a brief site analysis including understanding what could be achieved on your land or site

0435 918 136

Photograph of Michael Fuller, Founder of Hotspotcentral and Boomscore
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