The price is what everyone argues about. The terms are what decide whether the project survives its first six months.
The standard contract is built for houses, not sites
A standard NSW residential contract assumes you are buying a home to live in. Ten percent deposit on exchange. Settlement in 42 days. Then it is yours, and so is the interest.
For a development site that is the wrong shape entirely. Between exchange and the first slab, you need a survey, a design, a planner, an approval and a builder. That takes months. On a standard contract you are carrying the full purchase price, at development finance rates, while a certifier reads your drawings.
The three terms that matter
- A smaller deposit. A deposit well below ten percent at exchange, with the balance of the deposit or the price on settlement, keeps your cash working on approvals instead of sitting in a trust account. A deposit bond or bank guarantee can do the same job.
- A due-diligence period. A window after exchange, often several weeks, in which you can rescind if the survey, the geotech, the arborist or the planner finds something that kills the project. The vendor gets a motivated buyer. You get an exit if the ground is wrong.
- A long settlement, ideally conditional. Six, nine or twelve months, with settlement tied to approval. The vendor stays in the house. You get the DA or CDC before you own the land. The project starts the day you settle, not six months later.
Why vendors agree
Because we ask properly. An off-market vendor who is not under pressure to sell often prefers a longer settlement. They get time to find their next home. They avoid a campaign. They get a buyer who has done the work and will settle. A fair price with good terms beats a slightly higher price from a buyer who might fall over.
At auction, none of this is available. Terms are fixed and the contract is unconditional on the fall of the hammer. That is the quiet reason off-market beats auction even when the price is the same.
What good terms are worth
On a Northern Beaches site, six months of holding costs at development rates is real money. A due-diligence period that lets you walk from a bad block is worth the whole deposit. A conditional settlement that means you never own a site you cannot develop is worth the project. Terms are not a nice-to-have. They are a line in the feasibility.
What we negotiate for clients
- Deposit level and form
- Due-diligence period and what triggers rescission
- Settlement length, and whether it is conditional on approval
- Access during the settlement period for survey, geotech and site walks
- Vendor cooperation on the approval, including signing owner's consent
- Early access or licence to occupy where a demolition can start before settlement
Not every vendor will give every term. The ones who are not in a hurry usually give most of them.
The mistake to avoid
Winning the site and losing the terms. If you have to choose, give on price and hold on terms. The cash you keep in the first six months is the cash that carries the project to lock-up.