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Now that you have sold them you also need to manage those who have bought them. When your agent sells your existing house, you may not even meet or know who purchased your home and probably will never have anything to do with that person ever again. The agent, at best, may deliver flowers on settlement and keep the buyer in their sales database, following up every year or so. However, when you sign up a buyer for your subdivision then you will be making a significant commitment beyond the assistance your agent provides.

The commitment is proportional to when you make the sale in the development process. Before the section or house settles the agent has a vested interest in maintaining good relations with the purchaser — for the one simple reason they have a commission payment riding on there being no issues until settlement. After the property has settled, the agent has little incentive (except for repeat clients) for engaging with the purchaser (probably also low motivation as it can only mean there are problems). Therefore the agent will be motivated to assist you before closing, and you are largely on your own afterwards.

You will most likely need to deal direct with purchasers on upgrade selections, colour options and physical variations that have been agreed to in their contract. In addition, if you are pre-selling homes or sections before you have consents or before construction has started you will need to keep the buyer’s enthusiasm up with progress updates. Even if you have unconditional buyer contracts, this communication will help you if you encounter problems and need to engage with purchasers to renegotiate items. It can also smooth the wheels for when they take over the house. Signing up a purchaser on a new subdivision that will be 18 months before it is delivered requires some commitment by the developer. Don’t underestimate the amount of purchaser liaison required.

Purchaser management involves different facets during each stage of the development sales cycle:

1. Pre-Contract. As developer you may find yourself directly involved in the selling process, helping the agent as you attempt to convert a buyer to a signed contract. Some buyers will have a lot of questions on timing, quality, design and product specifications beyond what you have presented in your marketing materials. A good agent will sell without providing the buyer with additional detail (the details of which may not even be known when first marketing). However, there will still be questions that get through to the developer. To be prepared, before the next time the same question is raised, prepare and update a list of frequently asked questions (FAQs) for the agents to refer to. You could also put this on your project website and hand out with the brochure.
2. Contract Signing. Once the purchaser is unconditional (at least from their side), they are now in your system — so you better have a system! Do not leave managing purchaser information, correspondence and requests to the real estate agent, as they simply won’t be as good as you need them to be at it. Too much will be open to assumption and misinterpretation. Your lawyer, who administers the legal side of the contacts, if experienced with projects, should have an electronic database recording and updating all the key details. This database is a good starting point to append all the requirements you will need in managing purchasers. It will be prudent to protect the information the lawyers are responsible for from mistakes by using a shared but un-editable system where you can link that to your own information requirements. I have developed purchaser management systems and commonly find each project has so many bespoke requirements that you end up using a spreadsheet. A relational database, if properly set up and maintained, is ideal but, just like most proprietary feasibility models, nothing tends to completely fit the uniqueness of each project. There is a lot of information to keep track of and updated, for example:
   • Purchaser name and contact details
   • Purchasers’ lawyers name and contact details
   • Section and house number or address
   • Plan type
   • Sale date
   • Sale price
   • Variations to sale price
   • Deposits paid
   • Deposit interest accrued
   • Settlement costs to be added (land tax/rates)
   • Settlement sum remaining
   • Upgrade costs paid
   • Colour option selected
   • Upgrades selected
   • Variations to plans, design, specifications
   • Special conditional clause dates (planning approval, presales, sunset, pre-settlement access)
   • Special terms (variations from standard contract)
   • Agent details who sold, commission paid and outstanding
   • Scan of actual sale and purchase agreement.
3. During Development. During the pre-sales, consenting and construction period it is mainly a one-way communication approach with you updating the purchasers on the expected completion date and showing progress. It will quickly become two-way if you do not provide regular enough updates, or the updates don’t reflect the purchaser’s original expectations. This correspondence is also an ideal marketing opportunity to use your purchasers to help market your development to their associates, friends and family. The way you do this is by providing high quality communications emphasising smooth progress (regardless if it is or not) that include subtle incentives for your buyers to forward it on. Consider these categories of communication:
   • Section or Home Specific. This is primarily to show where you are at in the delivery programme with the purchaser’s individual house, section or super lot. You could provide a site photo and extract where the builder is currently at from your project minutes, for example, ‘roof complete, pre-lining commenced’. This one to one correspondence will be via email and you may also be addressing specific requests from the purchaser at the same time.
   • Project Specific. This is to give updates to all purchasers in the project. This is best done regularly (say every two months or at milestones when you have something new to convey). It could be acknowledgement that consent has been approved, a drone flyover showing progress of civil works, a photo of the ground breaking, the first roof on, the first houses settling and buyers moving in. You could use email, social media, a mailed project newsletter or link to a progress page on the website. You may discuss how well sales have gone if you are almost sold out, use it to profile the next stage or discuss new amenities in the area that will add value to any buyer’s purchase. Put enough in the communication that the buyer feels proud of their purchase and wants to spread the word.
   • Company General Newsletter. Use email, social media, and/or mailed (yep, via a postman) newsletters to correspond to your buyers about your company’s projects, success, interesting facts, milestones, introduce new employees and profile recent buyers. Set the newsletter up to be regular and have someone dedicated to producing it. Demonstrating the success of your company will instil confidence in the buyer that you can deliver. You could include a ‘For Sale’ page, showcasing other projects with sections and homes for sale. You could offer preferential terms before public release of new projects or invite them to events. Consider interviews with key partners such as financiers, urban designers, architects, interior designers and contractors. You could interview local politicians and key people in the community like principals and retailers. You can also include testimonials or quotes from buyers who have recently settled and moved in.
4. Pre-Settlement. As the section or home nears completion you should increase correspondence explaining when completion is likely. Provide buyers an estimate of when a call to settlement will be made and manage expectations around the margin of error. Most likely you will be relying on a local authority approval for meeting all conditions of building consent or the legal certificate of title. These approvals can take time and experience delays so you can only give your buyer an approximate settlement date. The buyer will push for exact dates for a number of their own reasons (for example, they have to organise funding or cancel the agreement on the place they currently rent). Don’t over promise, and make the purchaser well aware of potential delays.
5. Purchaser Inspection. Prior to settlement you should organise a purchaser inspection — at least if there is a house. This inspection is the best time to note down any defects as it is before they or their tenants move in and start to damage things themselves. Items identified now can be relayed to the builder to be fixed before the home is occupied. You or your project manager should be present with the purchaser and take great notes and photos. Don’t leave a pre-purchase inspection to the agent because defects often become a point of contention with the purchaser later on. Also refrain from making promises that any defect will be remedied before the purchaser settles and certainly do not leave the purchaser with the expectation that fixing something minor is a condition before they settle. It shouldn’t be. At this time the buyer may require other documentation for funding, so have a pack of information ready that can be quickly tailored to each buyer and their valuer if requested.
6. Settlement. Finally, you will start to receive income, but plan ahead to limit inevitable last minute hiccups. Have your lawyers followed up to make sure settlement does happen within the contractual period? Have requests to extend settlement been dealt with? Do they have all the correct information as to the full cost of options and variations so they can adjust the settlement price? Have you organised the set of keys (and security alarm codes, garage door openers, swipe cards)? Ensure all official documentation has been provided to purchasers. This can be provided as part of a ‘New Property Owners Welcome Pack’ including:
   • Warrantees and guarantees from suppliers.
   • Maintenance guidelines and schedule.
   • Manuals (appliances, security systems, plant, fire systems).
   • As built drawings, specifications, colour schedules, utility maps.
   • If delivering sections, any house plans promised, geotechnical completion reports and consents to be complied with.
   • Any Home Owners Association or Body Corporate rules and regulations and contact details of the manager.
   • Documents required for insurance.

The welcome pack is to look professional and to pre-empt inevitable questions later. Provide a compendium that includes photos (perhaps at milestones during construction), describes amenities in the area and summarises, in everyday language, key purchaser questions like connecting utilities, security systems, evacuation processes, limitations on noise, signage requirements, business use restrictions, visitor parking, garbage collection, mail, couriers, use of loading areas, allowable times for moving furniture and replacement of smoke alarms.

7. Post Settlement. Now that the agent has fulfilled their commitment (they have their cash) you are on your own with the purchaser. The main communications will concern remediating defects. It pays to have a good record and scheduling system to manage defects as the process can get very cumbersome. Consider this approach:

• Clearly advise the buyer of the procedure and deadline for notifying the developer of defects and the period the developer has to complete defects. This should be spelt out in the sale and purchase agreement but there may also be legislation that regulates this. Limit multiple off-the-cuff requests by asking buyers to submit one full and final remedial list. This won’t always happen but use your best efforts to minimise the back and forth to make it easier for you and your builder to get the work done.
• Have defects agreed first. Some items the purchaser will raise will not be a defect — it may just be how something is designed. You may have to argue some points with correspondence from your architect.
• Reconcile the purchaser’s remedial list with the builder’s to-do list that has already been provided by the architect (if these issues have not been dealt with prior to settlement). Give the builder one list per house and as many houses at the same time as possible — this helps them organise sub-trades more efficiently.

• Where defects need to be fixed when the house is occupied a degree of decorum and practical sense is required. Allow direct contact between a sub-trade and the occupier for access only when you have established the relationship will work. You want to first ensure that the sub-contractor will leave the place clean and that the occupier commits to being available if required for access.
• Database everything: when remediation works are scheduled to be complete; who is doing it; and contact details for owner, tenant, subcontractor, main contractor, property manager. Tick off issues when the works are complete, inspected and have been ‘approved’ by the purchaser.

• Communicate with each purchaser, using one updated master list, showing what has been completed, what is outstanding and when it will be complete. This helps mitigate multiple lists appearing for each house and incorrect assumptions from all involved. Communication can often get murky when the owner does not occupy the home and there is a tenant and a property manager involved.
• Where the issue is a manufacturer’s defect, encourage the home owner to contact suppliers direct, especially for items like appliances. This will ultimately be easier for buyers moving forward.

8. Post Project. Continue distributing your company newsletters, emails and social media feeds to your previous buyers. They can be a valuable revenue source for your next profitable project.

Andrew Crosby
+64 21 982 444
andrew@xpectproperty.com

Agents need to be closely managed. They are your direct link to the income you need to generate and that will determine how profitable your project will ultimately be. Many lone real estate agents are not the best at organisation and structure — the ‘salesman gene’ often in conflict with the ‘organisation gene’. They can be more difficult to manage. Agents who have project teams with a mix of sales gurus and organised administrators experienced in selling projects (as opposed to one-off houses) will typically have good systems in place that allow them to be more easily managed.

You should have regular weekly meetings with your agents, and get to know all the agents in the team that will be involved in selling, as well as the administrators in the background (whom you will depend on to get deliverables such as marketing feedback and produce advertisements).

Think of it as the developer’s job to keep your agent motivated throughout quiet periods and especially after the initial excitement of launch dissipates. Keep the agent focused on your project — they will have other listings as well if they are any good with equally demanding clients. Great rapport and communication is critical. Make sure you are talking to your agent on the phone, texting, email, having lunch, coffee – whatever, but you should be communicating almost every day. Not only are you following up on their performance but you are communicating your performance at delivering the project. So the conversation is as much about how their sales are going as it is about how your planning approval or construction is progressing. In a standard listing the agent only gets paid when the sale is unconditional and/or settled. That can be 12, 18 or even more months from launching the project. It’s a long wait for the agent to get paid, so you need to keep them focused on the riches at the end and how relatively close that is. Otherwise they may start to think about cutting their losses, especially if issues start to arise that potentially put the project in jeopardy. Whilst few will terminate the listing (as presumably they have made some commission payable sales) their motivation will wane and they will look for other projects to work on where the commission comes quicker. This is also one reason for using agents who have a dedicated project sales team, as the agents are experienced and used to the longer term nature of the project sale.

            Sales management will follow one of two different directions depending how sales are progressing.

Sales Going Well

When sales are meeting or exceeding expectations then sales management is all about maximising your sales prices and making sure you don’t sell too cheaply or do suboptimal deals. Mainly you can let your agent do their thing since it is obviously working. However, when signed sales contracts are coming in thick and fast, regularly sit down with your agent to make sure you are not under-pricing your product. Where possible push your prices higher. As tempting as it is to raise prices to increase your profit make sure you don’t push beyond what the market will bear. If you push too hard you run the risk that your product sits around a lot longer and goes stale with your sales programme losing momentum.

            This is a good time to look at trends and sales velocity and to keep ahead of the competition. Measure the number of leads that are being generated, the conversion rate and look at improving it even more. Obtain the records of everyone the agent has been in contact with (the agent may be reluctant, but it is your project, your money and your leads). Question the agent on who the potential buyers are and what motivations the agent has uncovered — this could provide valuable details that help you make tweaks that further maximise profit. It is also the time to reconsider releasing further stages earlier to take advantage of good sales. Further, make sure the agent is still working the project hard. With the pressure off they may get complacent and expect contracts to just happen, rather than hunt down the best deals.

            Obviously the key output of sales management is to help make sales. How do we make sure that happens in the first place? Well some reasons are within your control and others, unfortunately, are at the whim of the market. Reasons why sales are going well:

• You are priced right, offering more value compared to your competition.
• Your research paid off and you found a product type demand gap in the market.
• You are not forced to raise your prices above the market — such as caused by delays or rising construction costs or paying too much for the land in the first place.
• Your project is underway, and the objection to when you are going to start construction has disappeared.
• Your design is attractive to your target market.
• Your location is better than your competitors’.
• The market is on an accelerating cyclic upswing.
• Your agent’s team is well organised and knows how to sell.
• You are marketing the right message to the right targets in the right way.
• New competition hasn’t eventuated.
• Supply in your effective real estate neighbourhood is decreasing (and demand is stable or increasing).
• Expected positive externalities have come to fruition, or new ones have opened up — such as a new shopping centre down the road, a new school opening or a new park.

Sales Not Going Well

If sales are slower than planned then sales management is all about fixing the problem as quickly as possible. Property development is a constant process of evaluation and decision. You must decide and move forward otherwise your sunk costs and debt will eventually catch up with you and could sink the project — and maybe your solvency. Therefore if sales are slow and you cannot legitimately adjust your expected timeline (delay construction for example) without onerous costs impacts (and there typically are) then you need to make new decisions.

Firstly, identify what advertising plainly isn’t working and what is working. This is where measuring how your advertising is working becomes more important. Look at the advertising channels you are using and the message you are trying to convey. If something is working then do more of it and change or stop what isn’t working. If you can’t figure out why something isn’t working then change it anyway. How many leads are being generated and how many of these leads are being converted? What specifically can be done to increase more leads of the type that have a higher chance of being converted?

Secondly, review the objections to your product. There must be some as you are not selling! This is when it becomes important that your agent keeps diligent records and asks potential buyers all the right questions. If you don’t know the objections then you are flying blind. Get your agent to question everyone to solicit the real objections and form a database of responses. Be wary of the last anecdote the agent heard an hour before your meeting. Analyse this information so to form a picture of what the problem is. Uncovering the real objection is a challenge, but you must try. Of course there is always a price that solves all objections.

Thirdly, see the agent (and their display suite staff) in action and use a secret shopper to visit the display suite during open homes. Make contact via the website, phone and email using friends or aliases. Is your agent doing your product justice and can they actually close sales? Are they working the market or just turning up to meet and greet? Meet other agents to garner their opinion (acknowledging they will likely say almost anything to get your listing, but some will point out big issues with your product or sales approach as they see it). You need to determine if the problem is how you are selling as opposed to what you are selling. If it turns out you just have selected an incompetent or lazy agent, then make the quick decision to use someone else. This is why having a performance clause in your listing agreement is useful.

Fourthly, canvas wide opinion and relook at all your research in light of the current market. From what you have identified from everything above figure out the reasons why you are not selling, these could be:

• You are forced to price your product too high (therefore offering less value than your competitors) because you paid too much for the land, construction costs were underestimated or are rising and/or are having delays with consents.
• Your research has been poor and you have not identified the correct surplus demand capacity or the right product.
• Advertising is not reaching your target market (you are doing too little advertising, in the wrong publications or not creating a high enough profile and buzz in your effective real estate neighbourhood).
• Advertising is not conveying the right marketing message to describe your products value to the target market
• Marketing messages not aligned to the target buyer’s criteria. You might have assumed the target market is already looking for your product, when in fact they may need to be educated in your product in the first place (for example, three bedroom homes in a larger home suburb may go unnoticed until you educate buyers interested in this location of your smaller homes’ superior value).
• Your functional design is lacklustre compared to your competitors (for example, the second living area should really be another bedroom, or everyone needs double car garaging in this location).
• Architectural aesthetics have missed the mark — it doesn’t look good to your target buyer profiles.
• Your agent and sales team are not performing.
• The project has lost momentum and gone stale in the market. People now gloss over it and ask ‘why should I buy if no one else is?’ Or other negative perceptions persist such as the product now appears cheap and low value.
• The market has flattened and the media have turned negative on housing — you have missed the market upswing, or caught at an inflexion point.
• Affordability and available funding for your purchasers has decreased.
• Investors have left the market — investment yields are too low or banks are tightening up lending criteria.
• Your target market has left the effective real estate neighbourhood (foreign investor restrictions, immigration issues or the location is overtaken by a new type of gentrification or has entered a decline).

Finally, recalibrate your sales and marketing strategy to fix the problem. If the problem is minor (perhaps you haven’t been sending out a strong enough call to action, or advertising is slightly off target), then you may only have to tweak what you are doing. If your product is simply overpriced and you have no room to move on construction costs then you will need to make some big changes such as redesign or, worse case, cancel the project.

It can be demoralising to have to make significant changes, especially with all the hard work done to date. Unfortunately that is the reality of property development whether you are first time or experienced. There are so many variables difficult to control, or completely outside of your control that rarely does a project proceed without issue and some degree of change and rework. In a rising market, these issues are easily covered by the flow of money; in a down market the lack of money exposes and amplifies the problem.

Price solves most problems, even in the worst of markets and underlies many of the reasons above (someone will pay if the issue is appropriately discounted). Everything has a price and the quickest way to recalibrate your marketing is to leave everything else in place and lower the price. However, reducing your price should be a last resort even if your project can afford it. Throwing incentives (such as free holidays or reduced first year interest rates) to potential buyers is a half way measure, perceived by many as simply avoiding lowering the price. Including upgrades is a more discrete version of throwing incentives at buyers, but you have to get them in the door in the first place.

To maximise your profit, make sure you are comfortable and capitalised to enable new decisions and make potentially significant changes as part of your sales (income) management.

Andrew Crosby
+64 21 982 444
andrew@xpectproperty.com

After all this you mean we can finally launch our development? The launch can be key to your sales and marketing strategy. Like advertising, agents can receive significant profile on your ticket when launching a development, so make sure they don’t over-embellish the opportunity. You may decide to have more than one launch as you target different buyer groups or if you are offering different products (like a new stage). Launching the development is both an exciting and nervous time and the options to best present your project to the market are only limited by your imagination. Here are some examples:

• Registration of Interest. You advertise limited information about your project in order to collect a database of interested buyers and feedback before you formally launch. Sometimes used to test the market, the feedback may influence your development and how you subsequently launch.
• Soft Launch. This is where you sell homes or sections without any formal or advertised launch. It may be to your database of buyers, your social media network, repeat customers, friends and family or direct selling from the agent. A soft launch may be accompanied by something more formal later.
• Traditional Launch. You take out the best advertising your budget allows and with website operational and an open home time you invite buyers to your display suite the following weekend. This is when all your marketing collateral is complete and you have everything in order to close sales.
• Formal Function. Typically a few days before public release you hold a formal function onsite or at your display suite. This could be an evening wine and cheese or hors d’oeuvres formal event with noted signatories like the local mayor or politician giving a speech.[1] Invite consultants and contractors to be part of the audience. The event may double as a party to congratulate them on their efforts on the development to date. The key for sales is to have your agent bring as many VIP potential buyers along to this event.
• Associated Launch. This is where you dovetail the launch of your development with some other unrelated event to entice potential buyers to attend. Of course you will need to find some loosely related link to your development. It could be a ‘learn how to cook’ event from a local celebrity chef, ‘how to make drinks’ from a barista or mixologist, or a new furniture brand launch — all in your display suite.
• Special Cause Event. This is where you launch your development under the guise of, or in combination with, a special cause. It may be a large charity donation, providing affordable housing, providing community amenities such as a new playground or clubrooms or opening a farmers’ market. This can be made all the more attractive with the pulling power of a local celebrity.
• Big Carrot Launch. Think timeshare, where you win a holiday to some exotic location for attending (only to find out airfares are not thrown in) or any other sales gimmick. Attendees to the event have a chance to win a car, a furniture package or some other prize to go with the house they are about to buy. You could offer ‘attendees only early bird pricing’ for your sections and homes. If you are this way inclined, try to make the carrot as tasteful and related to your development as possible, rather than some type of used car promotion.
• Investment Seminar. Typically held in the ballroom of a central city upmarket hotel, your development is promoted as an investment opportunity to attendees — either on its own or in conjunction with other investments touted by the organisers. Choose your promoter partners carefully as this space is rife with sharks and charlatans.
• Milestone Launch. One of the most well-known examples is the breaking of ground, with the obligatory photo of the developer and a politician pretending to turn the first sod of dirt with a golden shovel. Another is the cutting of the ribbon by developer and proud home owner to indicate the first home in the project is complete.
• Media Launch. Housing is always in the news and if you are creative enough or just lucky enough to be on the right side of something topical you could get your project’s launch into radio, television or print as an item of news. Having a politician or celebrity attend also gives you a better chance of making the news.
• Auction. This is when you kick off your development with an event that surrounds an auction to draw interest and an immediate call to action. In a really hot market, where you know you are going to have oversubscribed interest (multiple bidders per property) this can work really well.
• Influencer. Either using someone with some sort of celebrity status or a staged event to essentially advertise your development through the influencers social media networks. The ‘subtle’ influencer endorsement creates a call to action to buy. Or the staged event gets so much attention, your development reaps in the publicity. Either way the goal[dream] here is for a post to go viral, and garner attention that builds upon itself, until that post itself is reported in the mainstream media. Early days for selling developments in this ‘influencer’ space, although sporting personalities have always been tapped in real estate.

The primary goal for your launch is to create enough buzz to make sales quickly and propel the project forward — profitably! To maintain sales momentum and profile in your market you may consider using a regular combination of the above during your sales programme.

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[1] To secure the attendance of the mayor to give the opening speech I once held a launch event in the middle of the day, in a marquee on the vacant development site — it received local newspaper and television coverage.

Andrew Crosby
+64 21 982 444
andrew@xpectproperty.com

To sign up your buyers you will need a sale and purchase agreement. In many jurisdictions there will be a standard sale and purchase agreement put out by the local professional real estate association. These contracts cater mainly towards existing home sales and often are not always appropriate for new developments, especially where you are pre-selling the home before construction is complete. Therefore, a bespoke sale and purchase agreement or a number of special conditions attached to the standard S&P agreement is typically required.

The sale and purchase agreement should identify the section or house number and the price. Typically you will include the house or section plans as well as outline specifications. For the developer the less information that is included the better to provide maximum flexibility. For the buyer the converse applies.

As a developer you need the sale and purchase agreement to both lock in the sale and protect you from implications that arise due to obstacles and unforeseen issues during planning, design and construction. You also want to protect the value of the development as you continue to sell it down as well as potentially lock-in further revenue streams. Engage an attorney to draft a number of pro-developer vendor clauses[1] into your sale and purchase agreement to address potential issues, for example:

• The right to cancel the contract if a planning or building consent is not achieved.
• The right to cancel the contract if a minimum number of sales is not achieved.
• The right to cancel the contract if unforeseen events prevent completion of the homes. An aggressive clause would be for any economic or practical reason, like an increase in construction costs and a conservative clause would limit it to war or acts of god.
• Ability to make like for like replacements in the specification without consulting the buyer — this is so you are protected if an item (like the type of tile) becomes obsolete and no longer available.
• Minor changes can be made to the plans without consulting the buyer; you need some wriggle room to make changes that may be forced on you by regulatory approval process or design issues that were not fully resolved at the time of marketing.
• Prevent the purchaser from lodging complaints, or taking legal action over noise resulting from construction and marketing activities on the development site. This is important where you expect to settle homes while construction is still underway nearby or when you have future stages to complete at a later date.
• Right for the developer to provide exclusive utility, property management, property maintenance, and other services to the property and could be accompanied by restrictions on whom the purchaser may use. Typically this is registered on the title as well so the condition runs with the land rather than the home buyer.
• Right to create easements, rights of entry and access. You may need to provide for services that run within private boundaries, maintenance strip easements allowing others to access tight spots to undertake work and shared private driveways. These ‘instruments’ will be registered on the titles.
• When selling sections, there are covenants on the timing, type, design, size, and/or value of the house that must be built on the section. Similarly you may want to stipulate restrictions on what is allowed to be onsite prior to construction — no caravans or trash or unsightly mess.
• Rules describing how long the buyer has to advise the developer of defects to fix after settlement.
• Rules of conduct required within the development once settled such as keeping front yards clean, no washing on decks, no business signage, no real estate signs, noise limits, and anti-public nuisance regulations. There could be local authority rules and existing legislation that limits what you can enforce.
• Rules over occupation such as maximum cars per household, maximum people per household, whether the house can be rented and minimum or maximum durations of rental and who the house can be rented to. There is highly likely to be local authority rules and existing legislation that limits what you can enforce (or even ask for).

Pro-developer does not necessarily mean anti-buyer, as value protection clauses do ultimately benefit the buyer. Many of these clauses can be used in marketing the development, distinguishing it from the competition.

Developments take time, markets change and the contract you put in place now may have to deal with completely different issues later. Clauses that seem extreme in a buoyant market come into their own when markets change or circumstances turn sour. These clauses are one of the developer’s best risk mitigation mechanisms. If the worst happens and your project has negative value (you are about to lose your shirt) having a clause allowing you to cancel the contract and re-sell it at a higher price or renegotiate the price can save your profitability.[2]

Of course, just because you include a restrictive clause in the agreement does not mean a savvy purchaser will agree. In a hot real estate market you may be able to secure a very one-sided developer-friendly contract as buyers are competing just to purchase the property. Conversely, a soft real estate market quickly results in soft, pro-buyer clauses in order to get sales. Sometimes these can have negative implications. For example, when sections are oversupplied and the developer just needs to get out, covenants may become less restrictive on the quality of house that must be built (so to increase the buyer pool) and this can result in an upmarket subdivision becoming downmarket in later stages quite quickly.

Pro-buyer clauses include:

• Ability to cancel the contract if completion or start of construction, or issue of title is not by a certain date (sunset date). This is almost always requested by purchaser’s attorneys if the developer has a clause that allows them to cancel the contract if minimum sales numbers are not reached. If you agree to sunset dates ensure you give yourself months if not years of contingency for the unexpected. There is no point committing to a date that is unrealistic unless everything goes perfectly (because it rarely does).
• Withhold a final payment (retentions) to incentivise the developer to remedy defects.
• Staged payments of deposits.
• Sections or super-lots, what is commonly called ‘builder’s terms’ clauses. These allow the buyer to have access to the section upon local authority approval to start construction and settle the land months later.
• Compensation if size changes by more than a certain percentage (for example, if section size is smaller by 5%).

Sale and purchase agreements have different formats for a tender or an auction. For a tender the agreement may list the documents provided for the purchaser to consider as well as conditions that will or won’t be entertained. For the auction, typically it will be a take it or leave it contract, occasionally allowing flexibility on settlement timing.

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[1] The vendor (developer) can choose to invoke the clause, not the buyer.

[2] This is another area where legislation in your jurisdiction may already have strict rules in place that you must follow.

Andrew Crosby
+64 21 982 444
andrew@xpectproperty.com

Lets talk about Bonuses. The last time I was a full time employee I spent an inordinate amount of time on developing a performance & incentive scoring, ranking and bonus scheme for the entire company (80 ish staff). My board threw me some google (or some tech giant) book on KPI’s (Key Performance Indicators) to kick it off.

Take out 9 sales consultants who basically are all bonus and I had to develop a bonus structure and system for 70 odd people, about 40 different positions* Well to be fair I had some ‘guidance’ from the Peoples Republic, probably a team of them up there. But I had to do a tonne of research of all the systems in use around the world by various companies so I could rebuild what was presented to me to make it workable in NZ for New Zealanders in our vertically integrated property development design construction and sales business. And I had previously rewritten everyone’s job descriptions as part of a massive restructure process to help me out on that.

Anyway, it took ages, it was comprehensive. With this knowledge it now means I am somewhat an expert in developing custom performance and bonus structures. I have even subsequently developed a templated software easy enough for SME to use it. But I customise extensively depending on the nature of the companies requirements, their organisational structure and staff roles. And I understand many of the issues that come up with setting bonus and KPI’s and the performance or not that results.

So if you are considering a performance and bonus structure for your organisation – give me a call. 021982444

And remember this golden rule:   If you promise a bonus and the employee succeeds in the KPI’s you set AND you don’t pay the bonus on time or worse you don’t pay it at all, you don’t deserve to be in business.

There is an onus on you to pay the bonus!

Key Performance Indicators: At Xpect we have built a KPI engine, an elegant and robust Key Performance Indicator framework that you can use with your staff to incentivise performance, increase new business and have everyone focused on the prize(s) that matter for your companies success.

Price on application.

And we recently built a specialist bespoke KPI for a local builder/developer in NZ:

“Andrew, the KPI tool you have put together for me is fantastic. I must say, it has dramatically transformed the way we manage and track our key performance indicators. From the moment I started using the platform, I was impressed by its user-friendly interface, which makes it easy for both beginners and seasoned professionals to navigate effortlessly.
One of the standout features is its customizability. You were able to tailor the dashboard to fit our specific business needs, allowing us to monitor the KPIs that matter most to our team. The visual representation of data is intuitive and effective; the chart presents information clearly and enable us to quickly identify trends and areas that require attention.
You deserve a special mention for your responsiveness and expertise. Whenever I encountered a question or needed assistance, you were quick to provide thorough and helpful answers.
In summary, the KPI Indicators is an exceptional tool for any organization looking to sharpen their focus on performance metrics. It enhances visibility into key data points and facilitates informed decision-making, ultimately driving our business forward. I highly recommend it to anyone seeking a robust KPI management solution. “

Steve Palmer
Managing Director
Hi-Tec Property and Developments Limited

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*The list of positions.
CEO
CFO
Investment Director
Development Director
Compliance Director
Operations Manger
Construction Manager
Senior Project Manager
Project Manager
Site Manager
Fence & Truck Guy
Maintenance PM
Maintenance Admin
CCC Manager
Head QS/Commercial Manager
Senior QS
Intermediate QS
Junior QS
Head of Sales/Marketing
Marketing Assistant
Health & Safety Manager
Development Manager
Junior Dev Mgr
Acquisitions Manager
Senior Architectural Designer
Architectural Designer
Junior Designer
Consents Administrator
Information Systems Manager
Sales Admin
Receptionist
Company Accountant
Assistant Accountant
Customer Service Manager
Payroll Administrator
Civil Project Manager
Cost & Compliance Manager
A few others I can’t recall the Titles….

Andrew Crosby
+6421982444
andrew@xpectproperty.com