If you've ever felt the thrill of finding a diamond in the rough, that elusive development site where the numbers actually stack up, then you probably also know the depths of despair you feel when someone snatches it out from under your nose.
If it happens to you multiple times in a row, you will inevitably ask yourself the question - why do I keep missing out on deals?
There's a few things to consider here, particularly if the reason you missed out was because someone else paid more than your numbers told you to pay. So let's look at that angle first.
I want to get one thing clear right upfront though - if you've done the research and the numbers thoroughly, have a top price you're willing to pay and then get outbid... NEVER increase your purchase price.
Good development sites can be hard to find, and it's too easy to get emotionally involved in a deal when you start to think about all the possibilities.
While it's good to be passionate about what you're doing, keeping a level head when it comes to the numbers is vital. When you're frustrated after missing out on more than one deal, the temptation to break the rules and offer more is hard to ignore.
And so I'll say it again... NEVER increase your purchase price. The only exception is if new information comes to light that changes the numbers.
Always keep in mind that you don't know why the other person is willing to pay more, and it's always possible that:
They're Numpties
Numpties is a great word as it covers many possibilities. Such as:
Of course not everyone who pays more than you is a numpty.
Your Numbers Are Too Conservative
Being too conservative with your numbers is another way emotions can get in the way of making good decisions.
Look, I get it, particularly if this is your first deal. No matter how confident we think we are about all this property development stuff, the fact is that the thought of losing money is hugely scary. You're a rare developer if that idea isn't lurking in your brain somewhere. It's the thing that keeps many of us awake and staring at the ceiling at 4am.
Having said that, if you're too busy being conservative so that you're "safe" then your chances of getting a deal diminish rapidly. I'm not saying that other developers who are willing to pay more than you are being dangerously risky. They probably just have numbers that err on the side of realistic, rather than conservative.
If you think this might be your problem, then I'd suggest you seriously consider finding a mentor who can double check your numbers and help you be more realistic.
They Know Something You Don't Know
This is a really important one. There's a lot of work that goes into doing due diligence on a site, and it's possible you missed something. Or maybe someone just had a different idea of what to do with the site, which allows them the room to pay a bit more.
Students in my mentoring program Property Development Formula will know that I share a very personal experience of this situation during bootcamp. I envisioned townhouses for a site - someone else saw a small apartment block. They were right.
Analysis Paralysis
While someone else being willing to pay more than you is a big reason for missing out on deals, the other most likely reason is because you were too slow.
Real estate is a relationship-driven business. A lack of networking often results in missed opportunities. Building relationships with real estate agents and vendors can open doors to deals that may not be publicly listed.
In fact, going direct to homeowners to source deals is one of my favourite ways of finding great development sites.
But even if you don't have that network yet, when a good development site pops up with an agent or online, chances are it won't be available for long.
Properties can go under offer within hours of being listed. Your hesitation to make a quick decision can lead to frustration as you watch properties disappear from the market.
That's one of the reasons I talk so much about being an Area Expert, and that concept plus my Rapid Elimination Method are at the core of my teaching around property development. You need to be able to instantly recognise a good deal, do some quick checks, and get your foot on it before anyone else does. It's that simple.
Let me be clear here - I'm not saying you should immediately make an unconditional offer! What I am saying is that you can take the deal off the market, then do all the due diligence you need to confirm it's really as good a deal as it looks at first glance. Once you've done the research, then you can go unconditional.
I'm not advocating that you constantly put offers on properties and then pull out. That's a surefire way to make sure you never get in the good books of any real estate agent.
But spending too much time weighing the pros and cons instead of acting can lead to missed opportunities, especially in competitive markets where quick decisions are essential. The fear of “what if” scenarios can be overwhelming.
That's why it's so important to know your market, know your numbers and buy yourself time to do your research on the site before you go unconditional.
Reverse Engineer Deals
One thing I highly recommend when you miss out on a deal is to keep track of what happens to that property.
Just because at the time you had no clue why someone paid what they did, that doesn't mean you can't work it out down the track.
Now, my first hypothesis might be right, and they were a numpty. In that scenario you may well see the property come back on the market with nothing having been done.
But you might also be able to watch the development take shape, and realise you were the one who got the numbers wrong or missed important information.
I certainly knew I'd missed a trick when I saw an apartment block being built on the site I talk about in bootcamp. It took a bit of digging, but I worked out how they managed to do that, when I thought only townhouses were possible, and of course the numbers made sense with that result.
At that point, take it on board as a learning experience, and keep looking. Missing out on development sites can be disheartening, but recognizing the reasons behind these missed opportunities is the first step toward improvement. The journey may be challenging, but with persistence and a proactive approach, transform those setbacks into future successes.
Then next time there's a much better chance you'll be the one who snares the deal!
If it happens to you multiple times in a row, you will inevitably ask yourself the question - why do I keep missing out on deals?
There's a few things to consider here, particularly if the reason you missed out was because someone else paid more than your numbers told you to pay. So let's look at that angle first.
I want to get one thing clear right upfront though - if you've done the research and the numbers thoroughly, have a top price you're willing to pay and then get outbid... NEVER increase your purchase price.
Good development sites can be hard to find, and it's too easy to get emotionally involved in a deal when you start to think about all the possibilities.
While it's good to be passionate about what you're doing, keeping a level head when it comes to the numbers is vital. When you're frustrated after missing out on more than one deal, the temptation to break the rules and offer more is hard to ignore.And so I'll say it again... NEVER increase your purchase price. The only exception is if new information comes to light that changes the numbers.
Always keep in mind that you don't know why the other person is willing to pay more, and it's always possible that:
They're Numpties
Numpties is a great word as it covers many possibilities. Such as:
- New
- Messed up the numbers
- Letting their emotions influence their decisions
- Didn't even know how to do the numbers
- And so on...
Of course not everyone who pays more than you is a numpty.
Your Numbers Are Too Conservative
Being too conservative with your numbers is another way emotions can get in the way of making good decisions.
Look, I get it, particularly if this is your first deal. No matter how confident we think we are about all this property development stuff, the fact is that the thought of losing money is hugely scary. You're a rare developer if that idea isn't lurking in your brain somewhere. It's the thing that keeps many of us awake and staring at the ceiling at 4am.
Having said that, if you're too busy being conservative so that you're "safe" then your chances of getting a deal diminish rapidly. I'm not saying that other developers who are willing to pay more than you are being dangerously risky. They probably just have numbers that err on the side of realistic, rather than conservative.
If you think this might be your problem, then I'd suggest you seriously consider finding a mentor who can double check your numbers and help you be more realistic.
They Know Something You Don't Know
This is a really important one. There's a lot of work that goes into doing due diligence on a site, and it's possible you missed something. Or maybe someone just had a different idea of what to do with the site, which allows them the room to pay a bit more.
Students in my mentoring program Property Development Formula will know that I share a very personal experience of this situation during bootcamp. I envisioned townhouses for a site - someone else saw a small apartment block. They were right.
Analysis ParalysisWhile someone else being willing to pay more than you is a big reason for missing out on deals, the other most likely reason is because you were too slow.
Real estate is a relationship-driven business. A lack of networking often results in missed opportunities. Building relationships with real estate agents and vendors can open doors to deals that may not be publicly listed.
In fact, going direct to homeowners to source deals is one of my favourite ways of finding great development sites.
But even if you don't have that network yet, when a good development site pops up with an agent or online, chances are it won't be available for long.
Properties can go under offer within hours of being listed. Your hesitation to make a quick decision can lead to frustration as you watch properties disappear from the market.
That's one of the reasons I talk so much about being an Area Expert, and that concept plus my Rapid Elimination Method are at the core of my teaching around property development. You need to be able to instantly recognise a good deal, do some quick checks, and get your foot on it before anyone else does. It's that simple.
Let me be clear here - I'm not saying you should immediately make an unconditional offer! What I am saying is that you can take the deal off the market, then do all the due diligence you need to confirm it's really as good a deal as it looks at first glance. Once you've done the research, then you can go unconditional.
I'm not advocating that you constantly put offers on properties and then pull out. That's a surefire way to make sure you never get in the good books of any real estate agent.
But spending too much time weighing the pros and cons instead of acting can lead to missed opportunities, especially in competitive markets where quick decisions are essential. The fear of “what if” scenarios can be overwhelming.
That's why it's so important to know your market, know your numbers and buy yourself time to do your research on the site before you go unconditional.
Reverse Engineer Deals
One thing I highly recommend when you miss out on a deal is to keep track of what happens to that property.
Just because at the time you had no clue why someone paid what they did, that doesn't mean you can't work it out down the track.
Now, my first hypothesis might be right, and they were a numpty. In that scenario you may well see the property come back on the market with nothing having been done.
But you might also be able to watch the development take shape, and realise you were the one who got the numbers wrong or missed important information.
I certainly knew I'd missed a trick when I saw an apartment block being built on the site I talk about in bootcamp. It took a bit of digging, but I worked out how they managed to do that, when I thought only townhouses were possible, and of course the numbers made sense with that result.
At that point, take it on board as a learning experience, and keep looking. Missing out on development sites can be disheartening, but recognizing the reasons behind these missed opportunities is the first step toward improvement. The journey may be challenging, but with persistence and a proactive approach, transform those setbacks into future successes.
Then next time there's a much better chance you'll be the one who snares the deal!
