Bidding with a competitive edge – This article outlines 10 of our best tried and tested bidding tips for property development, with EXP Property Investments Ltd.
By a means of introduction, I Jack Jiggens, the director of a South England based SME property development company. We value our work being agile, logical and of high quality. We really value our investors, partners, services and sellers. We’re really ramping up this year, and buying some fantastic opportunities in the Home Counties and London with over £6M worth of high-quality affordable homes due for delivery in the next 18 months. I wanted to share a snippet of how the purchasing success has come about.
We aim to send out two bids weekly and considering this week we have already had two bids accepted (its Wednesday), it would be fair to assume we’re doing something to stand out. Therefore I wanted to share some techniques which may sound small but will eventually pay dividends in competitive advantage.
- Offer on everything you view
There will be a price where whatever you view will work for you. So always leave something on the table. You may think the vendor or agent will dislike your low bids, but it’s all in the deliver.
For example, ‘Thank you for the viewing on the site. This site seems far better suited for an owner occupier. That said, if the vendor would consider the figure £XXX, we could move quickly with funds in place and we are not part of a chain. Aside from this site, we’re looking to purchase a development site quarterly so please send over more options’
2. Send two offers, always
We always offer twice. Sometimes three times within the same document. When offering, the key factor to appealing the best value is to hit all the sellers drivers/motivations to sell. Every person on the market will have a balance point between price and time, Fact. Therefore, if you’re bidding on a site which you know the vendor would rather a better price but could wait out, then why not offer a ‘Subject to Planning’ offer, whereby you can work on gaining planning permission without purchase and hold fees. Or on the flip side if the vendor needs to move quickly, offer with a discounted rate, with a proof of funds attached, Solicitors contact details and prepared to offer a non refundable deposit within X amount of time.
3. Make yourself an offer template
An easy 10 minute exercise of creating an offer template is a very simple way to present your offer with the best possible chance and appeal of credibility. Believe it or not we have actually had agents call us back and compliment us on our professional document (happy to share with anyone). It’s simple, its a letter so we make it a letter. We have a numbered schedule, 1. The Offer(s) explained 2. The name of the company purchasing the site 3. Timescales 4. Deposit details 5. The professional team (developers, Architect, planning consultant and solicitors) 6. Funding route 7. Due Diligence (all offers are subject to searches and surveys, but outlining elements that you have considered helps. It secured us a large mixed use building for 13 units) 8. Conditions 9. Track Record (supporting document if a new agent) 10. On acceptance 11. Contact details. Finally we put our company logo on all of our offers.
4. The agent is your friend
In nearly all cases the agent knows more about the deal than any other bidding party. That said, with rapport they may let you communicate directly. If you miss out on that particular opportunity and you leave the best impression, who will he come to next? It is very rare that the winning bidding party will take on another site immediately after. Therefore who’s next…?
5. View the property more than once
Use the viewing dates as two opportunities. Firstly to understand the deal and make sure it works and worth your time. Then, use it as a chance to prove you’re serious and build rapport with the vendor or agent. Staying back on viewings can really save you time in the long run. I see too many people out there looking for a quick fix, but the key information is lying under the surface. Recently I was bidding on a site whereby the agent told me some information (having build good rapport), which then allowed us to make our bid much more attractive to the vendor. Sometimes the vendors incentives can be far amiss from just a high purchase price.
6. Metrics…. Get out there.
You view less sites, you offer on less sites, you win less sites. Fact.
7. Bid in Ones and Sixes
This is a small hack which shouldn’t make too much of a difference but it does. I am speaking about bidding on sites in the south where most other developers almost 9 times out of 10 bid in multiples of £5,000. Example, on a guide of £330,000 bidding above guide to secure the property people may bid £335,000. If you would like the site and can go above the guide, I would suggest bidding £336,000, as you normally nudge ahead rounded bids.
8. Chase offer updates
This applies pressure on the other bidders they may be considering. If the vendor has not fed back to you within a few days it’s clear that they’re still pondering on areas of the bid. Either between the level or the conditions of the bid. Keeping on top of the agent or vendor during this stage and finding these pivotal points makes it even easier to nail the selling motivations of the vendor. It also creates even more rapport with all parties.
9. Offer then agree terms
Sometimes we find due to lack of commitment by the sellers or agents it can be difficult to understand what will actually work. Some vendors merely do not want to sell in reality and others just refuse to speak with people. These example factors make it difficult to create the deal from your end. Basically stabbing in the dark. A technique we’ve had luck with in the past is to meet their terms in one way or another to take you to the next stage of agreement/ negotiation. It shows intention and then gives you the ability to tweak the areas of concern once committed as the ‘buyer’ rather than ‘bidder’.
10. What’s the worst that can happen/ Ask the question
Back to point number 1. Offer on everything. If you’re unsure or on the fence, put in an offer, what’s the worth that can happen. If you operate in a very tight local area (which is very unlikely if you’re a developer) you will have to make sure your delivery is astute. Second to that, If you have a question, ask. What is the worst that could happen.
I hope the above was considered a good use of your time and you have benefited with some form of ‘competitive’ technique. I would love to hear feedback on the article so please reach out and if there is anything I could do for any readers, send me a message… What’s the worst that could happen 🙂
Land and Acquisitions Director
EXP Property Investments