Real estate agents are inherently unsuitable for property development. Their incentives favour speed over price, leaving developers vulnerable to tight timelines, back-to-back buyer traps, and unnecessary due diligence costs. After 40+ years and a costly lesson early in my career, I now approach owners directly to negotiate exclusivity, manage timelines, and structure deals that benefit both parties.
Core Answer:
- Agent commission structures incentivise quick sales rather than price optimisation ($200k price increase = only $1,500-$2,500 extra for the agent)
- Developers require 60-90 days for due diligence and feasibility studies. Agents need quick closures and will keep you as a backup buyer.
- Direct owner approach cuts agent fees ($16k-$48k savings on $800k properties), guarantees exclusivity, and eases timeline pressure.
- Option agreements with owners grant 90-day exclusivity for due diligence, with exit clauses if numbers don’t meet expectations.
- Agents serve a single purpose: market intelligence (price points, comparable sales, location data), not acquisitions.
The usual advice to be transparent with agents for better prospects overlooks the core issue: real estate agents are inherently opposed to what property developers require.
Why Agent Incentives Work Against Developers
Agents need their fee paid promptly and with ease. The typical commission in Australia is 2%-2.5%.
When a property sells for $200,000 more (say $1 million instead of $800,000), the agent’s commission only increases by $5,000. After agency splits, that individual agent nets between $1,500 and $2,500 extra.
For the owner, $200,000 is life-changing. For the agent, pocket money.
This is why agents push sellers to accept lower prices quickly. The commission structure incentivises speed over price optimisation.
Reality Check: Agent incentives favour quick closures over developer timelines. The math renders transparency unnecessary.
What Developers Need (And Why Agents Won’t Provide It)
Property developers require time. We engage consultants, invest in due diligence, and assess whether a project is viable at a certain price point before making commitments.
Agents will claim there’s someone else interested, but you never know if it’s true.
Here’s the question: Would you fork out $20,000 on due diligence if other buyers are supposedly circling?
When you approach an owner directly, you negotiate exclusivity. I prepare option agreements that give me 90 days to complete due diligence and feasibility studies. If the figures are favourable, I move forward. If not, I walk away or renegotiate the price.
You can’t get that via an agent.
Bottom Line: Developers require exclusivity and time, while agents need speed and backup buyers. These needs are incompatible.
The Backup Buyer Trap
Agents will tell you that you have time to do your due diligence. But make it quick.
If someone else buys the property, they’ll say “sorry, you took too long.” They keep you as a backup in case they can’t sell quickly.
I’ve seen developers spend thousands on consultants, engineers, and feasibility studies, only to lose deals to quicker buyers. The agent moves on. The developer bears the cost.
This isn’t personal. Agents are appointed and paid by property owners to sell for the highest possible price in the shortest timeframe. That’s their job. The structure is fundamentally incompatible with development timelines.
Key Point: Being a “sticky beak” or showing transparency doesn’t alter the fact that agents benefit from having multiple buyers compete on compressed timelines.
When Do Agents Actually Serve a Purpose?
Large-scale developers acquire sites via agents when competing for large landholdings (former industrial sites where they lease the property while securing rezonings and development approvals).
These developers borrow money on their balance sheets, not as standalone projects like I do. Their borrowing costs are minimal. They absorb the agent’s timeline pressure and uncertainty.
For project-specific financing, the agent system breaks down.
Strategic Insight: Agents serve developers by providing balance-sheet funding and executing large-scale acquisitions. For mid-tier developers using project financing, the economics don’t add up.
How to Find Sites Without Agents
I don’t approach owners to buy their property. That triggers their instinct to call an agent and “test the market.”
I send letters asking about their future plans for their property and whether they’re thinking of selling. If they are, I mention I might be interested.
Then I follow up by door-knocking within two weeks. Most people won’t respond to the letter alone.
People seldom call an agent after speaking with me. Here’s why: People don’t like real estate agents. If they can get an above-market negotiated price without the hard sell and stress of dealing with an agent, they’ll go directly.
Plus, they aren’t paying marketing costs (usually $6,000 to $20,000 in Australia) or agent fees. For an $800,000 property, sellers save $16,000 to $48,000 by selling directly. I remind them of this.
Cleaner transaction. More money in their pocket. Less stress. And I get the time and exclusivity I need for proper due diligence.
Execution Framework: Soft inquiry letter → door knock within 2 weeks → build trust → negotiate 90-day option agreement → complete due diligence → proceed or exit.
How to Build Trust With Owners
You build genuine trust with owners. I have 40 years in property development. I’ve written books, lectured at universities, and traveled across Australia teaching this.
I have personal skills that relate well to people. I never wear a “spivvy” suit to meetings.
Everything involves balancing getting a deal done and moving quickly enough so owners don’t consider other options. But my sense of urgency differs from an agent’s pressure.
I work with the owner to agree on a timeline. I try to stick to the timeline without pushing too hard. Agents apply enormous pressure on owners to accept any price so they can move to the next sale. I negotiate terms that benefit the seller.
Trust Equation: Credibility + relatability + aligned incentives = willingness to negotiate exclusivity without testing the market.
The One Way Agents Are Useful
Agents are great sources of market intelligence. I visit properties for sale and talk with agents to determine price points, spot good and bad locations, and understand what properties look like.
Owners will report comparable sales when we negotiate. I need to be kept informed.
When I visit properties, I first evaluate the agent’s character. Some will sell anything to close a deal.
If I sense I can trust them partly, I’ll start by discussing property values. Gather the info first before revealing what I’m after.
And I make sure to tell them I have no interest in that particular property before I leave. Otherwise, they’ll keep bothering me, hoping I’ll be their backup buyer.
If I tell an agent what I’m after, I’ll receive calls about properties they “just listed” or things that are “off market” (which just means they haven’t started advertising yet). I avoid most properties with a quick five-minute phone call.
The agents usually figure out what works for me quickly, but I rarely seek development opportunities in this manner.
Intelligence Protocol: Assess character → Extract price data → Clearly state interest level (none for that property) → Prevent backup buyer harassment.
What New Developers Get Wrong
New developers prefer to take the “easy” route. They see buying through agents as the simple option, even though it’s the financially poorer choice.
They want to hurry up instead of learning the proper way to make money.
I mentored someone who kept showing me sites with development approvals already in place, being sold by agents. I’d ask: “Why do you think a property developer would sell a site with its approval?”
Shrugged shoulders.
Because the project isn’t viable, I’d suggest they conduct a feasibility study and see for themselves.
This person eventually gave up on property development because they thought things were too difficult. Things weren’t too difficult. They were simply too lazy.
Warning Sign: If a site already has approvals attached and is being sold by an agent, the previous developer has run the numbers and moved on.
What I’d Tell My Younger Self
If I could go back to 1985 when I began my first project at 21, I would tell myself this:
Forget about learning building and construction. Focus on property development. Find a mentor. Read every book you find on property development.
Talk to property developers. Begin earlier than 21.
Transact more regularly to gain experience with agents quickly. You learn about real estate agents through direct experience. The more transactions you have, the faster you understand their incentives.
Lesson Learned: Speed up your learning by repeating, not taking shortcuts. Experience with agents shows you why to steer clear of them.
The Real Choice
There’s a choice: working with agents or approaching owners directly.
Agents will tell you there’s time for due diligence, but they keep you as backup.
You might take that risk if an owner wants to sell quickly for a low price. Be ready for what the approach involves.
After 40 years, I’ve made my choice. I approach owners directly. I negotiate exclusivity. I build trust. I structure deals that work for both sides.
And I never purchase a development site through a real estate agent.
Frequently Asked Questions
Do real estate agents ever assist developers in finding suitable sites?
Agents provide market intelligence such as price points, comparable sales, and location data, but they don’t assist with acquisitions. Their commission structure encourages rapid deals rather than prioritising developer needs like exclusivity and adequate due diligence time. Large developers with balance sheet financing utilise agents for industrial-scale acquisitions, but mid-tier developers relying on project financing face misaligned incentives.
How do you negotiate exclusivity directly with property owners?
I structure option agreements that grant 90 days of exclusivity for due diligence and feasibility assessments. Owners agree because they receive above-market prices, save between $16,000 and $48,000 in agent fees and marketing expenses, and avoid the stress of traditional sales processes. The agreement also includes exit clauses if due diligence shows the project isn’t viable.
What prevents owners from calling an agent after you approach them?
People don’t trust real estate agents. When they realise they’ll keep more money (no agent fees or marketing costs), experience less stress (no hard sell), and have a smoother transaction, they prefer to deal directly. I also move quickly to agree on terms before they consider other options. Building trust through credibility (40+ years’ experience, published books, university teaching) and relatability (no “spivvy” suits) helps.
How do you find properties to approach directly?
I send letters asking owners about their future plans for their property and whether they are considering selling. I mentioned I might be interested if they are. Then I door-knock within two weeks because most people won’t respond to the letter alone. This gentle approach avoids triggering their instinct to “test the market” with an agent.
What’s the risk of buying through agents for smaller duplex projects?
You spend over $20,000 on due diligence while competing with other buyers. Agents keep you as a backup. If someone else secures the deal faster, you lose the property and forfeit the due diligence costs. Agents say, “sorry, you took too long” and move on. You also end up paying higher prices because agent fees and marketing costs are included in the sale price.
Why would a developer sell a site that already has development approval?
Because the project isn’t viable. When agents sell sites with approvals attached, the previous developer ran feasibility numbers and walked away. New developers see this as an “easy” opportunity, but they’re buying someone else’s failed project. Conduct your own feasibility study before committing.
How can you use agents for market intelligence without turning into a backup buyer?
Start by assessing the agent’s character. If you sense some trust, gather price data and location intelligence before revealing what you’re after. Before you leave, clearly say you’re not interested in that specific property. This helps avoid harassment and other buyers stepping in. Agents are sources of information, not just channels to buy.
What timeline pressure do agents impose on developers?
Agents claim there are other interested buyers (whether true or not) and push for rapid decisions. Developers require 60-90 days for due diligence, engaging consultants, and conducting feasibility studies. Agents need settlements within weeks to get paid and move on to the next deal. The $200,000 price increase that matters to sellers nets agents only $1,500- $2,500 extra, so they prioritise speed over price optimisation.
Key Takeaways
- Agent commission structures create misaligned incentives. A $200,000 price increase for sellers results in only $1,500-$2,500 extra for agents, who tend to prioritise quick sales over maximising price.
- Developers require 60-90 days for due diligence and exclusivity. Agents need to act quickly and keep multiple buyers competing as backups, rendering transparency strategically unnecessary.
- Direct owner approach saves $16,000-$48,000 in agent fees and marketing costs, offers 90-day option agreements with exit clauses, and removes timeline pressure.
- Build trust through credibility (experience, publications, teaching), relatability (avoiding “spivvy” suits), and aligned incentives (sellers get more money, less stress, and cleaner transactions).
- Use agents solely for market intelligence. Gather price and location data, then clearly state that you have no interest in specific properties to prevent harassment from backup buyers.
- Sites sold with approvals attached indicate that feasibility studies failed. Previous developers assessed the project and then backed out. Conduct your own analysis before proceeding.
- The “easy” route through agents is the less financially sound option. Direct negotiations with the owner require more skill initially but yield better financial outcomes and greater control over the entire deal.
Conflict-of-Interest & Commercial Disclosure: LEFTA Corporation Pty Ltd advises clients across Australia and may seek future joint-venture opportunities at some of the sites discussed. Views expressed are personal and do not represent any current client mandate.
General Advice Disclaimer: This article is based upon the personal experiences of the Author. No portion of this article is intended to provide legal, financial or professional advice. The information contained herein is not a substitute or replacement for the services of qualified professionals, legal, financial and insurance experts. The Author, its publisher, agents, servants, contractors, employees and representatives will, under no circumstances, be liable for any special or consequential damages that result from the use of, or any attempt to use, the information contained herein. You are solely responsible and accountable for any actions, decisions and results by your use of the information contained herein. You agree not to attempt to hold the Author and LEFTA Corporation Pty Ltd liable for any such decisions, actions or results, at any time, under any circumstances.
