I often get asked what are the biggest mistakes budding property developers make, and it's a question that can take a while to answer!
One of the costliest mistakes I see, though, is developers buying sites unconditionally without having done their due diligence first. Trust me, doing that is fraught with danger.
So when the market's hot, and it seems like everyone but you is making unconditional offers or buying at auction, what can you do?
First up, I want to be clear that negotiating both the price and terms of your offer is always an option, regardless of the market conditions.
Reality, though, is that in a slow market when vendors are getting desperate to sell, it's going to be a lot easier to get a conversation started around due diligence clauses.
In a hot market, it's the buyers who are getting to desperate to buy, and engaging vendors in talks around due diligence clauses is much harder. Why would they negotiate with you, when there's a bunch of other buyers waving unconditional offers at them?
Let's be real. Due diligence clauses are designed to give developers breathing room. Time to investigate, consult experts, and run the numbers properly before committing. They are the safety net that ensures you’re not gambling millions on assumptions.
But as I said earlier, in a hot market, sellers often resist these clauses. Unconditional offers feel cleaner, faster, and more certain.
And it's that last word that's the key - certainty. One of the big reasons vendors (and agents, for that matter) love unconditional offers and auctions is because the outcome is certain.
No sitting around holding their breath while the conditional clause timeframe ticks down. The contract's signed, the deal's done, and they can move confidently on with their plans as they wait for settlement.
While this need for certainty appears to work against you, the trick is to make it work in your favour. The fact is, around 30% of properties sell prior to auction. Why? Again, it's certainty. Why risk waiting for auction and the uncertain outcome of that, when you have an offer that works right there in front of you? It's the classic "a bird in the hand is worth two in the bush" scenario.
Two Offers
What you need to do is get the vendor engaged with the idea of accepting an offer even if it's not unconditional. That's why my favourite technique is always to make TWO offers to the vendor at the same time.
The first one matches the vendor's terms, along with a price that takes into account all the extra holding costs, risk and more that you'd be taking on board if the offer is accepted.
The second offer gives the vendor the best possible price you can, assuming you get the terms you need. These could be anything from delayed settlement to a due diligence period.
The beauty of this approach is that it very quickly exposes what matters most to the vendor - terms or price. Once you understand that, you can work on improving the offer that matches their needs the best.
Mind you, be prepared for the likelihood the vendor will come back with a counter offer which has the high price and their terms. One of those scenarios where I'd be a rich man if I got a dollar every time it happened!
If the vendor still says no and it goes to auction, make sure you attend on the day and see what happens. If it's an absolute feeding frenzy and the price goes sky high, you were never in the running anyway.
But if interest is low, and the property is passed in, that gives you an opportunity to go back to the agent again with your two offers. Even better, now you know the most the market was willing to pay and can match that with your offer. In particular, it's likely to make your high price offer look a lot more attractive even with your terms attached.
Another angle to consider is not whether to push for due diligence, but how to do it without losing the deal.
Shorten the Timeframes
One of the biggest objections agents raise is that due diligence drags out the process. To counter this, offer a shorter, sharper clause. Instead of asking for 30 or 45 days, try 7 or 14.
If you’ve already built a trusted team of planners, builders, surveyors, and legal advisors, you can accelerate your checks. A shorter clause signals to the seller that you’re serious, organised, and won’t waste time.
The key is being realistic about what you can actually get done in that timeframe. It may mean front-loading some work before even signing.
Review zoning maps, overlay data, and planning schemes in advance. Order quick searches on titles, easements, and overlays. Drive by the property and speak with neighbours. In many cases, a lot of the due diligence can be done in advance at relatively low cost.
Use A Narrow Clause
Vendors are very wary of due diligence clauses that are essentially "get out of jail free" clauses. Essentially you give yourself the option of pulling out of the contract without much justification, which gives the vendor little certainty that the offer will stand.
So instead of a broad "subject to due diligence" clause, consider a narrower condition that focuses only on the most critical risks. For example:
This approach reassures the seller that you’re not using the clause as a blanket "get out" option. You’re being specific about what you need to check, and you’re putting tight timeframes around it. Sellers and agents are more likely to accept this approach.
Know When To Walk Away
The reality is: not every hot market deal is worth chasing. If you can’t secure the clauses you need, and the risks are too high, the smartest move is sometimes to walk away.
Plenty of developers have lost fortunes by going unconditional in a frenzy. Missing one sewer easement, bushfire overlay, or planning restriction can wipe out profits overnight. Discipline in saying "no" is often more profitable than chasing every shiny object site.
Hot markets come and go. Protecting your capital ensures you’re still around to buy when conditions cool and opportunities are easier.
Final Thoughts
For property developers, due diligence clauses aren’t about annoying vendors, they’re about survival. In heated markets, sellers and agents may resist them, but as I've outlined, there are smart ways to negotiate.
The best developers strike a balance between being aggressive enough to secure deals but cautious enough to avoid disasters. With the right strategies, you can win sites in competitive conditions AND protect yourself from the hidden traps that turn projects into money pits.
In the end, the developer who survives and thrives isn’t the one who writes the biggest unconditional cheque - it’s the one who plays the long game, balancing risk and reward with precision.
One of the costliest mistakes I see, though, is developers buying sites unconditionally without having done their due diligence first. Trust me, doing that is fraught with danger.
So when the market's hot, and it seems like everyone but you is making unconditional offers or buying at auction, what can you do?
First up, I want to be clear that negotiating both the price and terms of your offer is always an option, regardless of the market conditions.
Reality, though, is that in a slow market when vendors are getting desperate to sell, it's going to be a lot easier to get a conversation started around due diligence clauses.
In a hot market, it's the buyers who are getting to desperate to buy, and engaging vendors in talks around due diligence clauses is much harder. Why would they negotiate with you, when there's a bunch of other buyers waving unconditional offers at them?Let's be real. Due diligence clauses are designed to give developers breathing room. Time to investigate, consult experts, and run the numbers properly before committing. They are the safety net that ensures you’re not gambling millions on assumptions.
But as I said earlier, in a hot market, sellers often resist these clauses. Unconditional offers feel cleaner, faster, and more certain.
And it's that last word that's the key - certainty. One of the big reasons vendors (and agents, for that matter) love unconditional offers and auctions is because the outcome is certain.
No sitting around holding their breath while the conditional clause timeframe ticks down. The contract's signed, the deal's done, and they can move confidently on with their plans as they wait for settlement.
While this need for certainty appears to work against you, the trick is to make it work in your favour. The fact is, around 30% of properties sell prior to auction. Why? Again, it's certainty. Why risk waiting for auction and the uncertain outcome of that, when you have an offer that works right there in front of you? It's the classic "a bird in the hand is worth two in the bush" scenario.
Two Offers
What you need to do is get the vendor engaged with the idea of accepting an offer even if it's not unconditional. That's why my favourite technique is always to make TWO offers to the vendor at the same time.
The first one matches the vendor's terms, along with a price that takes into account all the extra holding costs, risk and more that you'd be taking on board if the offer is accepted.
The second offer gives the vendor the best possible price you can, assuming you get the terms you need. These could be anything from delayed settlement to a due diligence period.
The beauty of this approach is that it very quickly exposes what matters most to the vendor - terms or price. Once you understand that, you can work on improving the offer that matches their needs the best.
Mind you, be prepared for the likelihood the vendor will come back with a counter offer which has the high price and their terms. One of those scenarios where I'd be a rich man if I got a dollar every time it happened!
If the vendor still says no and it goes to auction, make sure you attend on the day and see what happens. If it's an absolute feeding frenzy and the price goes sky high, you were never in the running anyway.
But if interest is low, and the property is passed in, that gives you an opportunity to go back to the agent again with your two offers. Even better, now you know the most the market was willing to pay and can match that with your offer. In particular, it's likely to make your high price offer look a lot more attractive even with your terms attached.
Another angle to consider is not whether to push for due diligence, but how to do it without losing the deal.
Shorten the Timeframes
One of the biggest objections agents raise is that due diligence drags out the process. To counter this, offer a shorter, sharper clause. Instead of asking for 30 or 45 days, try 7 or 14.
If you’ve already built a trusted team of planners, builders, surveyors, and legal advisors, you can accelerate your checks. A shorter clause signals to the seller that you’re serious, organised, and won’t waste time.
The key is being realistic about what you can actually get done in that timeframe. It may mean front-loading some work before even signing.
Review zoning maps, overlay data, and planning schemes in advance. Order quick searches on titles, easements, and overlays. Drive by the property and speak with neighbours. In many cases, a lot of the due diligence can be done in advance at relatively low cost.
Use A Narrow ClauseVendors are very wary of due diligence clauses that are essentially "get out of jail free" clauses. Essentially you give yourself the option of pulling out of the contract without much justification, which gives the vendor little certainty that the offer will stand.
So instead of a broad "subject to due diligence" clause, consider a narrower condition that focuses only on the most critical risks. For example:
- Subject to satisfactory soil test results within 7 days
- Subject to council confirming zoning for intended use within 10 days
- Subject to buyer’s solicitor’s approval of title searches within 5 days
This approach reassures the seller that you’re not using the clause as a blanket "get out" option. You’re being specific about what you need to check, and you’re putting tight timeframes around it. Sellers and agents are more likely to accept this approach.
Know When To Walk Away
The reality is: not every hot market deal is worth chasing. If you can’t secure the clauses you need, and the risks are too high, the smartest move is sometimes to walk away.
Plenty of developers have lost fortunes by going unconditional in a frenzy. Missing one sewer easement, bushfire overlay, or planning restriction can wipe out profits overnight. Discipline in saying "no" is often more profitable than chasing every shiny object site.
Hot markets come and go. Protecting your capital ensures you’re still around to buy when conditions cool and opportunities are easier.
Final Thoughts
For property developers, due diligence clauses aren’t about annoying vendors, they’re about survival. In heated markets, sellers and agents may resist them, but as I've outlined, there are smart ways to negotiate.
The best developers strike a balance between being aggressive enough to secure deals but cautious enough to avoid disasters. With the right strategies, you can win sites in competitive conditions AND protect yourself from the hidden traps that turn projects into money pits.
In the end, the developer who survives and thrives isn’t the one who writes the biggest unconditional cheque - it’s the one who plays the long game, balancing risk and reward with precision.
