Many 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 become immersed in local developments and indeed seek them out to sell on behalf of development firms or individual investors.
So how do you make this aspiration a reality?
The answer is hard work dedication and the desire to learn and adapt. I started out my career as an estate agent and now, 30 years in, I’ve developed over 900 units with a combined resale value in excess of £285 million.
There are several skills learnt as an estate agent that provide solid foundations for any novice developer. One of the most important is being able to accurately value a seller’s home. This will stand you in good stead when you need to assess the value of a potential project and forecast its GDV (gross development value).
Another great transferable skill is the ability to negotiate with buyers and sellers, as once you’re developing, this expertise will be needed when negotiating material prices and contractors’ rates.
As an agent, selling a property is a great achievement, however, if the mortgage lenders surveyor highlights any major defects or potential areas of concern you will need to have an understanding of the most practical and cost-effective ways to resolve the issue as this will assist in keeping a sale together.
It's also important to invest in knowledge and having a greater understanding of the legal processes will pay dividends. Understanding restrictive covenants and solutions to things like defective leases can unlock a project that many would walk away from.
Lacking knowledge can be costly and one relatable story that springs to mind is a small developer that paid over the odds for an office to resi-scheme close to one of London’s major airports. In a rush to secure the deal ahead of other interested parties he failed to recognise that, although planning was in place to convert the building into apartments, due to the fact the building was located on the edge of an industrial estate, no lenders were prepared to advance mortgages to prospective buyers.
Unable to refinance the building to repay the bridging lender the developer sadly lost everything he had invested. A costly error that could have been avoided with greater knowledge and thorough due diligence.
The greater understanding you have of any business the more likely you will be to succeed and whilst there are many more disciplines to development than those learnt in an estate agency, the foundational lessons learnt 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 be staring you in the face, but it takes experience and know-how to instantly calculate the risk vs reward. Our biggest success is finding hidden gems that we know we can take through planning to enhance the value or even secure an underappreciated asset that could then be flipped for an immediate profit.
Essentially, all agents are developers in training, but only a minority successfully make the transition to run the whole show.
Key skills to become a successful developer:
Master the sales process
From accurately valuing a property to overcoming any survey issues and successfully progressing a sale through to completion; learn every step of the process and build your knowledge. This knowledge will pay dividends when your own livelihood depends on calling the shots correctly!
Build your black book
As an estate agent, you will encounter a wide range of individuals. Whether a solicitor, mortgage broker or builder, if their service impressed you, be sure to get their contact details and add them to your professional team. Don’t forget to keep details of active investors.
Learn how to identify opportunities
Get 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 will know where to look and what to look for.
Get your hands dirty
Having knowledge of the construction industry will also come in handy so take time to understand the various processes. As an agent be sure to show a keen interest and ask plenty of questions when on refurbishment or new build sites.
