Selling to a developer or through an agent: which is right for you?

Most Adelaide owners sell the traditional way. Appoint an agent, prepare the house, advertise it, wait for offers.

Selling directly to a developer is a different kind of transaction. There's no marketing campaign, no stream of buyers walking through the house, and no agent between you and the purchaser. You negotiate price, conditions and settlement directly with the person buying.

I'm a developer, so of course I see the benefits of a direct sale. I also know it isn't the right choice for every property. If the house is where the value sits, an agent can create competition between people who want to live in it. If the value is in what can be built on the land, dealing directly usually produces a better fit and a much simpler sale.

What are you actually comparing?

A developer can buy through an agent, so the buyer and the selling method aren't the same question.

The real comparison is usually this: an open-market campaign run by an agent, or an off-market sale negotiated directly with a developer.

An agent exposes your property to a much larger pool of buyers and manages the campaign. In return you pay their commission, plus marketing and campaign fees:

• photography
• listing and advertising fees
• admin fees
• staging and styling

A direct sale removes the campaign. The developer assesses the site, makes an offer, and negotiates the contract with you.

Prefer an answer for your own block? Request a free assessment — no cost, no obligation.

Side by side

The number that matters isn't the sale price. It's what you keep after commission, marketing, preparation and the months spent carrying the property.

A direct offer that looks slightly lower can end up the same in your pocket — or better — once every cost comes out. A direct sale also saves you a lot of stress, time and effort along the way.

The reverse can also be true. Even after saving agent fees and marketing, an open campaign might have fetched a substantially higher price. So if you take the direct route, check that the offer is genuine market value. Compare it against recent comparable sales.

A good, honest developer will show you that evidence. You can also check it yourself. Look at the sold section on realestate.com.au, compare like for like — same land size, similar condition — and use sales from the last six months.

How each side works out the value

An agent starts with comparable sales

They look at similar properties nearby, weigh up condition and presentation, and recommend a price or a campaign strategy. The aim is to attract buyers and create competition.

This works particularly well when the property appeals to homeowners. A renovated character home, an attractive family house, or a property in a tightly held street may sell for far more to someone who wants to live there. An owner-occupier can make an emotional decision. A developer can't make the numbers work by falling in love with the kitchen.

An agent can also expose a development site to several builders and developers at once. If more than one wants it, that competition can produce an excellent result.

The catch is that an appraisal isn't an offer. You only know the price once the campaign produces a buyer who is willing and able to proceed.

A developer works backwards

We ask what can be built, what the finished homes or allotments would sell for, and what it costs to deliver them. Take off construction, subdivision, consultants, finance, selling costs, tax, contingency and a commercial return. What's left is the residual value of the land. Here's that calculation in full.

That can reveal value ordinary house sales don't show. A tired home on a large block may put a family off, because they see repairs. A developer may see three well-positioned allotments.

It doesn't follow that every large block carries a development premium. Planning rules, frontage, shape, slope, trees, easements, access and services all affect what's achievable. Here's how to check yours.

When a direct sale works well

The land is worth more than the house

This is the clearest case. The house may be old, poorly positioned, damaged, or simply past the point where spending money on presentation makes sense. A homeowner discounts it for the work required. A developer weighs the land and what it can yield.

You also avoid spending money presenting a house the buyer intends to demolish.

You'd rather avoid a public campaign

Not everyone wants their home photographed, advertised and opened to strangers. That matters for a deceased estate, a tenanted property, a separation, a downsizing move, or simply an owner who values privacy. A direct sale usually means a couple of site visits and no board out the front. I've even bought property where I've never been inside the home.

The property is hard to present

A property doesn't need to be empty, renovated or styled before a developer will assess it. Old kitchens, damaged flooring, overgrown gardens and half-finished renovations change an ordinary buyer's reaction. They rarely change the development potential of the land.

Developers generally buy in current condition. You shouldn't need to spend months and thousands of dollars making a future demolition site look attractive.

You need control over settlement

A direct sale lets the settlement date be discussed before the contract is signed. Some owners want it quick. Others need months to find another home, settle a family arrangement, or let a tenant's lease run out. A developer can often accommodate a longer settlement, because the project takes time to plan anyway.

Depending on your situation, I'll sometimes go further and let you name the settlement date after the contract is signed. You lock in the sale now, and decide when you actually move later.

Whatever you agree, get the date and any other arrangement written clearly into the contract.

You want fewer moving parts

An agent campaign involves photographers, listings, inspections, offers, and buyers whose finance or circumstances can change. A direct sale is more contained. One buyer assesses the property, makes an offer, and negotiates terms.

That doesn't make every developer offer certain. Its strength sits in the contract: the conditions, the deposit, the due-diligence period and whether the buyer can actually settle.

A due-diligence period is a window after signing. The buyer uses it to check the things that decide whether the project works — the title, the planning rules, the services, sometimes a concept design. If a serious problem turns up, they can withdraw or renegotiate within that window.

That's normal, and it isn't the part to worry about. What matters more is who you're dealing with. An experienced developer who presents as a professional, and backs it up with real knowledge of your site, will usually follow through. A newcomer testing the waters is a bigger risk. Examine the contract and the person behind it.

When an agent is the better choice

The house is the valuable part

If you own a well-presented home with little development potential, I'm unlikely to be your highest bidder. A family may pay for the renovations, the school zone, the garden and the feel of the place. A developer works backwards from the land, and allows little for improvements that will eventually be removed. In this scenario, I would politely decline to make an offer and recommend that you sell with an agent.

The property will attract strong competition

Some properties suit an open campaign. A tightly held street, a distinctive home, or a suburb with very limited supply can bring several motivated buyers. An auction or expressions-of-interest campaign then lets the market set the price.

You want the market thoroughly tested

A direct negotiation gives you an offer. It doesn't expose the property to every possible buyer.

An agent campaign gives you peace of mind that the price was competitively tested. But testing the market is not the same as guaranteeing the highest price. I've offered owners a price off-market, only to watch them accept a lower one at the end of an agent campaign. Other developers tell the same story. Test the market if that certainty matters to you. Just don't assume the open market always pays more.

Before you decide, it helps to have both views: a written developer offer, and a realistic read on what the open market might pay. Remember an appraisal is an estimate, not an offer. It is also a sales meeting.

It's also worth knowing a practice that does occur. An agent quotes a high price to win the listing. You sign an exclusive agreement for three months. They then use that time to bring you back towards what the market was always going to pay. You accept a lower price at the end of the campaign. Not every agent works this way. Ask how they arrived at their figure, and test it against comparable sales yourself.

What a credible developer offer should tell you

A serious offer is more than a price sent by text message. At a minimum, you should understand:

• the purchase price
• the deposit
• the settlement period
• whether the offer is subject to finance
• whether there's a due-diligence condition, and how long it runs
• what access the developer needs before settlement
• whether the buyer can nominate another person or entity
• what happens if the buyer doesn't proceed

You can also ask what the developer thinks the site supports, and what that view is based on. They may not hand over their whole commercial feasibility. They should still be able to explain the broad assumptions: likely yield, the finished product, and the main constraints they've found.

A developer who understands your property can discuss all of that plainly.

Making sense of a long due-diligence period

By a long condition, I mean a due-diligence or investigation period that runs for weeks or months, during which the buyer can still walk away.

A long condition isn't automatically a bad sign. It can be entirely reasonable, and it may well be worth allowing — as long as the developer can explain why they need it.

A serious developer spends real money before settlement. Getting development approvals can cost $30,000, $40,000, $50,000 or more, plus tens or hundreds of hours of their time. Someone prepared to commit that isn't looking for an easy way out. They need the time to be sure the project stacks up before they're locked in.

The question is which kind of buyer you have. A diligent professional can tell you exactly what they're checking and why. A non-committal one wants the control without the commitment, and can walk away leaving you back where you started.

I've seen the bad version first-hand. I bought a site where the buyer before me was another developer. Their contract carried a due-diligence clause with no time limit at all — a bad sign on its own. They strung the owners along month after month. The owners were inexperienced, and eventually had to bring in lawyers to break the contract before they could sell again. It was a thoroughly unpleasant experience for them.

My contract had a due-diligence clause too. The difference was that the agent knew me, and knew I would follow through. I did.

So don't reject a long condition out of hand. Test it. Before signing, ask:

• Can the developer explain, specifically, what they need the time for?
• Is the due-diligence period clearly limited?
• Has the developer done any projects before?
• Who is the developer? Someone doing projects full-time under an established brand? Or an accountant having a go at it on the side?
• Have they shown they can actually complete the purchase?

The contract matters more than anything promised at the kitchen table. So does the person signing it. Do they pass your vibe test? Do they feel like an honest, professional, trustworthy person?

A direct sale is still a formal sale

Direct doesn't mean informal. There must be a written contract, and a Form 1 vendor's statement has to be prepared.

Cooling-off works the same as any normal residential sale, whether you sell through an agent or directly. In South Australia the buyer normally gets two clear business days to cool off. A few unusual exceptions apply. Worth knowing: the seller gets no cooling-off right in South Australia. That protection is there for the buyer.

If you've already appointed an agent, check the agency agreement before doing a direct deal. Depending on its terms, the agent may still be entitled to commission even if you found the buyer yourself.

A practical way to decide

If I were selling a property with possible development value, I'd want to know two things.

1. What might the open market pay for it as it stands?
2. What is the site worth when assessed for what can be built on it?

You can usually answer the first yourself. You know your own home and your own street, and recent comparable sales fill in the rest. A developer can answer the second. Then compare:

• the likely net price after selling costs
• the conditions attached to each option
• the time involved, and the work expected of you
• the privacy
• how certain the buyer and the contract are
• how well the settlement timing suits your plans

For some owners the open market is clearly better. For others, a properly structured direct offer saves money, avoids months of disruption, and delivers a settlement that actually fits.