How to GET LISTINGS by targeting and converting property developers and buildersAug 15, 2022
In this post, we are going to run through how to prospect local builders and property developers to win listings for sale.
I actually focus most of my own prospecting activity in my own real estate business around this grouping of client
The simple logic is property developers are in business to make money. They are generally one of the least emotional groups about the game of property. To them, it’s simply business.
The local builder and property developers’ day-to-day role, in the simplest terms, is to purchase a property holding of some sort, invest money into the property holding, develop or redevelop that property holding into a far greater property, or into multiple properties, and then, to sell those new properties, to make a profit.
Now let this bell ring loud and clear in your head, the only way the property developer gets the money back that was used to purchase the land holding and develop or redevelop it, let alone earn a profit, is to successfully sell the development.
Local property developers ALWAYS are always in the market to sell
In my experience, having worked with massive national and international property developers, the actual best grouping of property developers for the local real estate agent to prospect and work with are the local small to medium-sized property developers.
I have found that the small to medium-sized property developers are the most lucrative and enjoyable group to work with and here is why
Massive national and international property developers; simply do not care about the local real estate agents. The main focus of national and international developers are their investors and reaching the promised financial return for those investors.
With national and international property developers rarely will you ever deal with the actual decision-maker. National and international property developers in general have their own sales team, and are likely to have numerous other agents working on the same properties as an non-exclusive listing.
National and international property developers will pull the development if the returns promised are not achievable. What I mean by this is, oftentimes, a condition of the funding will the property developer will need to sell a certain percentage, usually 25% upwards to 50% of the project off the plans, before construction starts. In many cases, this can be a year or more of pre-sales. At any time prior to construction, if the project is not meeting its financial targets, its not uncommon for the developer to bin the project. Meaning commissions due will never be paid, because in general, commissions are paid at certain stages of construction.
This makes this type of prospect lead time-consuming and risky.
Of course, there is always an exception to the rule, and this exception will have particular governing factors, such as you have already established your real estate business in the local community and you’re highly excited and passionate about what the larger developer is building in the local community. As a general rule of thumb, it would be less risky to work on a larger project once construction is in fact underway.
It’s also advisable to already have a consistent and established listing pipeline, as although the pay days can be on the larger side if you do work with national or international developers, it can take 18-24 months at times to get paid.
So before you move on to why in fact you should be working with the Small to Medium Sized property developers in your marketplace, I want to quickly cover one other group that can be distracting from achieving success in winning repeat, consistent, and paying business from the developers in your marketplace, and that group is the Mum and Dad first time investor-developers
You will find if you work in a marketplace where there is active property development happening, that you will also find Mum and Dad first-time investor-developers in this marketplace – with this group of developers I would say approach with caution
So why do I say approach with caution when it comes to Mum and Dad investor/developers.
At the beginning of this post, you might remember that I said property developers are generally the least emotional group of property owners to deal with, well that is except for the Mum and Dad investor/developers who are doing their first property development
Mum and Dad Investors who want to be developers can be a minefield of emotion to deal with, and my advice is only taken on this property developer client when you have become settled and confident in your role as the go-to real estate agent for your marketplace
To generalize this type of client, they tend to have some sort of money behind them, either they are high-income earners, or they have made money through selling off some of their property investments.
It’s important to mention here you will find them more reasonable to deal with, if they were the original owners of the land which is getting developed into properties for sale - however, if these Mum and Dad investor developers are outlaying the money for the land and the build and all costs associated with selling … you’ll find 9 times out of 10 … they are highly emotional to deal with due to the heightened risk associated with such a purchase and project, simply because they are not practiced in managing the risk and stress associated with the game of property development
Small property developments, depending on their size, take about 12 – 18 months to complete if everything is going to plan. Global and local property markets can take quite significant shifts upwards and downwards in the same time frame…property development and the high costs associated is a risky game if you’re not fully across the local and national economy and the local buying market.
If the real estate agent does not choose their Mum and Dad investor development clients well, then they might find themselves, working for free for 12 months, as they nurse the mum and dad developer through the emotional stress of the project, only to be told at the end of the project that they have decided to rent all the properties out, as they now realize after they have paid everyone else in the project they’re not going to make anywhere near the small fortune they imagined.
The flipside is true, in the fact, that these mum and dad developer types may in fact sell the properties in the development … however, they will try to hold out on their prices until they recover their costs and are likely not to accept the offers brought forward by the agent, which are showing the true market value.
An astute property developer knows to read the buying market and to sell efficiently so as to reduce holding costs. Astute developers know holding costs eat up profits … Mum and Dad investor-developers often are not practiced in this line of thinking.
All in all, I am not saying do not take on the Mum and Dad Investor Developer as a client, I am saying approach with caution and manage them correctly throughout the process
Because if it all goes wrong and these people do not get their money back out of the project, they will look for someone to blame – and unfortunately, us real estate agents are an easy target to place blame upon, simply because we could not find the last unicorn on earth who was willing to pay over-market value for our Mum and Dad Investor Developer’s property.
So, if you do happen to come across this client should you walk away or should you take them on?
I would strongly suggest you do your due diligence first. Take my lesson on how to do a CMA of a top listing and selling agent, and decide for yourself, that do you believe that their final product is sellable in your marketplace and at the price-point the clients are hoping for?
If yes, then I would meet with the clients, and ask yourself would you like to work with them for a year or more, do you resonate with them? Are you happy to be a supportive agent to them through their process?
If yes, then go for it, better to be paid a group of commissions for selling a group of properties, as opposed to just one commission for selling one property – however, follow this golden rule….
Provide the Mum and Dad Investor-developer regular (by regular best case would be fortnightly emails) market-updates; keep them well appraised and well informed of everything that is similar to the property type that they are building, which is listing and selling in their developments marketplace.
Well-informed and often communicated with sellers make for much better clients and you’re far more likely to get paid well and receive a great testimonial from these clients ….
And you’re also more likely to realize sooner, if these clients will simply hold on to the end properties and rent them ... so, you will be more prepared not to put all your eggs in one basket when it comes to your projected earnings for the months ahead.
Ok So let’s move on to my preferred group of property developers to work with
And that is, the active, medium to small-sized local property developer
So why are the small to medium-sized property developers the group of developers that I suggest for the local real estate agent to work with?
Small to Medium sized property developers systematically and consistently build the same number of property developments – year in/ year out.
So, what is a small to medium-sized property developer? These developers, often are family businesses, and generally, their projects will take 12 – 18 Months from start to completion, generally, they only use their own money and bank funding to back the project, as opposed to having investors, you should expect such a developer to build anywhere from 4 to say 24 ish properties a year in small groupings
They buy the land, invest money to develop it into something sellable, and then they sell what they’ve built, to firstly, get their money back out and then to secondly make a profit.
And then guess what – they do it all over again.
They are consistently in business; they are consistently developing, and they are consistently selling.
In my eyes - they are the perfect client.
They are also great referrers of business for us real estate agents. The community of developers talk a lot among themselves simply because they all share the same trades to get their jobs complete, meaning, in general, they all use the same concreters, bricklayers, carpenters, kitchen installation companies etc. As the local real estate agent in your marketplace, if you get a name for yourself as being effective at selling property for the local small to medium-sized developers you will find yourself being called regularly by that business grouping to work on other projects
They are the client that I personally target consistently in my own real estate business.
Now that we understand why we target the marketplace of small to medium-sized developers.
Let’s look at the process of how?
My favorite thing about developers is they are pretty easy to find – let's look at how
Step 1: Drive every street in your marketplace regularly.
As a side note I am a big fan of doing this regularly in my marketplace … in the very beginning, while you have all the time in the world, do it daily, as you get busier, a couple of times a week, and then push it out to once a week – why is this?
For 3 simple reasons, first, if you want to dominate any marketplace - you should know it – you know every street and every property on each street.
- Showing up in your marketplace daily, means you will see opportunities quicker, making you a proactive agent in the marketplace and
No. 3 – is because you will notice if an agent is trying to work his way into your marketplace and can take proactive measures to protect your business as opposed to being caught on the back foot when you’re losing listings to some new agent who you know nothing about!
Ok so back to our little goldmine of business also known as the marketplace of small to medium-sized local property developers.
By driving each street in your marketplace regularly you will notice land sites being made ready for development or property development already under construction
So this brings us to Step 2:
All construction sites will have a notice of who the builder of that job is. That notice or signage will have a contact detail for the builder
It's important to note, that the builder and developer can be different people. The builder is the literal builder. The developer, is the person who generally owns or has some ownership of the land and has applied to develop it into something else, a developer can be a builder or can hire a builder.
The best type of developer client is the client who is the developer and also who owns the building company that is building the development.
Ok let’s revert to our prospecting activity, now we have an address of a very real potential listing, plus we have the phone number of a key person we can call from the signage on the building site.
Before we go jumping on the phone, we’ll educate ourselves first on what is being built on the site.
Let’s run through the best steps to educate ourselves on what is being built at the property address and who is the key decision maker that can sign our listing authority
The reason developers are such an easy group to target is because if you know what you’re looking for, they are super easy to find…
In order for anyone to build anything in anywhere - they first must be given permission by the local government.
Local governments have a requirement to make their received planning applications and planning permissions granted, public, meaning the received planning applications and planning permissions granted are made available to the local community.
Simply all the agent needs to do is to go onto the local government's website and search the planning applications for the property address … The agent can search for either planning approval, building license or demolition license for that property address online - and will find their way to what is being built at the property address and to who the building permission has been granted to.
The most exciting thing about this search to me is, the realization of how many other development planning permissions have been granted in your marketplace signaling many many many more real listing opportunities to the active and bold real estate agent.
So reverting back to the current listing opportunity at hand, we now have a very real listing opportunity, we have educated ourselves as to what is being built on the land, and we will see that the planning approval will have listed the building company and it may or may not have listed the developer, if the developer is listed, it will most likely to be in a business or trust name as opposed to the developers own personal name
So in most cases we are required to dig a little deeper again to find the name and contact number of the actual owner and the person who can sign the authority to list the properties for sale.
The simplest and most direct route is to call the building site supervisor (whose number is usually posted on the signage at any building site,) or the building company owner/manager… and ask who the property developer is and if the builder can share the contact details. 9 times out of 10, its more likely that the builder will take your details, as opposed to giving out their client’s details if they are not the property developer themselves.
However, you still make this call first, because there is some relationship with the owner and the builder and connecting in well with the builder may well prompt the developer to call you back. Oftentimes I have gotten a call back simply because the developer was impressed with my initiative in hunting for the business.
And of course, there is always that 1 time out of 10 chance the builder will just be like sure – here is the property developers’ details.
In the case that the builder took your contact details to share with the property developer, then your next step will be to investigate the land (so, the development site ownership) online through the use of the business tools and software employed by the real estate company you work with.
Our property software will tell us the exact name of the landowner - next we just have to track that person down! It really is as simple as that!
Because it is a development project which you are researching, the ownership may be in a business name - if so then just search business registration records online - the same concept as the planning permission applies here, business names have to be registered lawfully and their directors listed and made public - so it really is a simple as searching the online business registration authority for your region.
This will bring you to either a name or better again a name and an address
If through your searches you find a phone number, then GOLD - you now have a direct point of contact for a real listing opportunity for multiple listings within your marketplace
If you eventually only get a name and a residential address – it’s a proactive idea to mail the owner a letter introducing yourself and requesting the opportunity to meet to discuss their property development.
If you get no-response, I would continue mailing monthly to this property owner and also, I would make it my habit to pop by the site monthly, introducing myself to the different trades on site and each time asking for the best contact number of the owner.
Showing this type of initiative around a development listing, you will be guaranteed to win listing opportunities and successfully sign-up development listings to sell…
Here is why, developers always need to sell, because it’s the only way they will get the money back they invested and it’s their only hope if making a profit is their intention.
A small to medium-sized property developer needs a good real estate agent AS MUCH as they need a good plumber, carpenter or electrician in order for their project to be a success!
And here is the other important need to know in why its worth winning development-style clients … do you remember what I said earlier, the property developers in your marketplace, form a small community, and they tend to have the same trades quote on their projects – they build strong relationships within their local development community – if the local trades are talking to the local developers about an active real estate agent who takes initiative in the area … then the developers will call you! That is the number one reason why you should always make connections with the trades on the actual development site, always say hello, always introduce yourself to the trades, always ask the trades for the property developer's best contact details.
Always keep it to the front of your mind – as soon as the property developer finishes one project – they are on to the next … developers – Offer repeat business with multiple listings!
Ok, so let’s sum it up…
- You found a development opportunity listing in your marketplace
- You researched that development opportunity on the local government site – and in doing so, you have learned what is being built on that particular lot of land. You also found many many more development listing opportunities in your marketplace by realizing through your research how many local planning permissions the local government grant.
- You have now made contact with the local builders and trades within your marketplace and you’re working through that community network… making yourself known and available as an active local real estate agent
- You have through a bit of digging found the contact details of the actual person who can sign the listing authority to sell the property and can accept on offers presented.
- You have come to the awesome realization that developer clients are great clients to hunt for and cold call because this grouping of clients offers repeat business of multiple listings!!
So now that you’re face-to-face, either literally, over the phone, or via a posted letter – to the actual property developer…. What do you say? How do you convince this property developer that you’re the right agent to list and sell the property development?
Property developers are a different beast than the mum and dad local homeowners. Local homeowners in some cases only sell one or two properties a lifetime and in the best case, sell a property every 5 years at a certain period in their life
However, property developers in general sell multiple properties each and every year. The other observation that is worth mentioning with regards to the local small to medium-sized property developers is when they find a trade that works well within their project dynamic … they tend to use the trade on all their projects going forward while the dynamic is working well … developers want their projects built to a certain standard, in a certain time frame and sold at a certain price point - they want to take their money and profit out at the end, and then they want to start all over again.
So, think of yourself as a trade to them, as a cog in their machine. From the local real estate agent’s perspective, understand the local property developer needs you as a cog in the machine in order for the development project to be a success.
The downside of dealing with the small to medium-sized property developers for the local real estate agent is the property developer has seen it all and heard it all before from other local real estate agents … so something about how you approach the developer will need to impress the developer for the developer to consider giving you the business of listing the development of multiple listings for sale.
Property developers by nature themselves are go-getters, they take initiative, and they take educated risks. That is exactly what they are doing on the project you have just found them involved in … they have taken the initiative and invested their time and money and taken an educated risk on developing a property project in the local marketplace.
This is the same energy the local property developer will appreciate in you as their local real estate agent
The property developer will want to know that you are
- A go-getter … that you’re ready to go after and ask for the business
- You take the initiative … that you will be able to take charge of selling the development and know what needs to be done to get the properties sold successfully
- You’re educated on the marketplace and its buying groups – the developer will want to know, that you know what is selling in the marketplace, for how much, who is buying it and, that you know how to present the properties in the development to the marketplace so they sell effectively and in a timely time manner.
As a local real estate agent, we already know you’re a go-getter and that you take the initiative … we know that simply by you being in the game of real estate
So we know you’re a go-getter and we know you take the initiative, but how do we communicate that to the local property developer, along with the fact you are educated on the buying market and property listings and sales within your marketplace?
The first step is to be able to speak with the local property developer with the air and grace of a local property market expert …. why is this? Simple, because in all likely hood, the local developer is a local property market expert, this property developer has not invested significant sums of money or time into a project without doing detailed due diligence on the marketplace and its buying activities to ensure what is being built is what is sought after by the marketplace and will sell at the price point which the developer allowed for in the development profit and loss sheet, prior to building, to ensure the developer gets the money invested back out and makes a profit.
So, my friend, if your market knowledge is not up to speed, this developer will notice straight away and this will impact their decision on listing their property for sale with you
If your local property market knowledge is sharp and fast – you will impress the local property developer and they are likely to see you as an asset to the property developments success
Developers are businesspeople – there is little to no emotion with them, its all timing, facts, figures and the ability to get the job done!
I teach often, that you can become a complete and total local property market expert in less than 30 days, in any market, even if you are brand new to the industry or brand new to a marketplace - by following a set of simple steps and processes. – I teach these steps in my 30-Day Prospecting Bootcamp Programme – If you’re not already a member click the link below today’s post to access
To wrap up this post, we want developer clients because they offer the opportunity, of multiple listings and repeat business consistently – in my opinion, they are the most lucrative group of property sellers in the marketplace to prospect.
To get a property developer to take you on as the development listing agent, you need to prove you are a go-getter, you take the initiative, and you are a local property expert.
It would be wise, should the property developer, not grant you the listing on the first go, and they give it to another agent, to continue to keep building a relationship and prospecting to this developer and asking the developer for the business. Always remember that small to medium-sized property developers are consistently developing property in the local marketplace and you will keep the door open to the opportunity for upcoming listing opportunities.
Ok team, if you’re not already participating in the 30-Day prospecting bootcamp, click the link below today’s post to access the exact steps, processes, and scripts to win listings from the local property developers in your marketplace within the next 30-Days