The path from agent to developer isn’t easy, but it’s relatively straightforward, if you’re willing to learn and adapt your skills.
Many real estate agents aspire to make the transition from agent to developer, why? Because that’s where the real money and prestige is. After all, most good agents immerse themselves in local developments and indeed seek them out to sell on behalf of development companies or individual investors.
So how do you make that aspiration a reality?
The answer is dedication to hard work and a desire to learn and adapt. I started my career as a property agent and now in 30 years have developed over 900 units with a combined resale value of over £285million.
There are several skills acquired as a real estate agent that provide a solid foundation for any novice developer. One of the most important is being able to accurately appraise a seller’s home. This will come in very handy when you need to assess the value of a potential project and predict its GDV (gross development value). Another great transferable skill is the ability to negotiate with buyers and sellers, because once you grow, this expertise will be needed when negotiating material prices and contractor rates.
As an agent, selling a property is a great achievement, but if the Mortgage Lenders Surveyor highlights any major flaws or potential areas of concern, you will need to understand the most practical and cost-effective ways to resolve the problem. problem, as this will help hold a sale together.
It is also important to invest in knowledge and a better understanding of legal processes will pay dividends. Understanding covenants and solutions to things like bad leases can unlock a project that many would walk away from.
Lack of knowledge can be costly and a relatable story that comes to mind is of a small developer who paid beyond the odds for a residential office project close to one of London’s major airports . Pressed to complete the deal before other interested parties, he failed to acknowledge that although there were plans to convert the building into apartments, the building was located on the edge
of an industrial area, no lender was willing to advance mortgages to potential buyers. Unable to refinance the building to repay the bridging lender, the developer unfortunately lost everything he had invested. A costly mistake that could have been avoided with better knowledge and thorough due diligence.
The better understanding you have of any business, the more likely you will be to succeed and although there are many more development disciplines than those learned in a real estate agency, the fundamental lessons learned are invaluable and timeless.
The art of the deal is finding the diamond in the rough when it comes to finding your next site. Sometimes the obvious potential can stare you in the face, but it takes experience and know-how to instantly calculate risk versus reward. Our greatest success is finding hidden gems that we know we can plan to increase in value or even secure an undervalued asset that could then be flipped for immediate profit.
Essentially, all agents are developers-in-training, but only a minority make the transition to running the entire program.
Key skills to become a successful developer:
- Master the sales process
- From accurately valuing a property to resolving any survey issues and successfully progressing a sale to completion; learn every step of the process and expand your knowledge. This knowledge will pay off when your own livelihood depends on making the right decision!
- Build your black book
- As a real estate agent, you will meet a wide range of people. Whether it’s a notary, mortgage broker, or builder, if their service has impressed you, be sure to get their contact information and add them to your professional team. Remember to keep active investor details.
Know how to identify opportunities
- Go out and find potential development sites for your key contacts. Build your confidence and knowledge so that when you’re ready to go it alone, you know where to look and what to look for.
Dirty your hands
- Having knowledge of the construction industry will also be helpful, so take the time to understand the different processes. As an agent, be sure to show a keen interest and ask lots of questions when on renovations or new construction sites.
To provide advice and guidance, as well as shape future developers, Bruce and the Real estate experts the team will organize a day Master class event to wednesday 16and March from 10am.
For more information or to register contact the team at Tel: 020 8720 6901 or visit www.propertyexperts.co.uk