What to check before making a land bid

Short answer. Twelve checks, ordered from cheapest to most expensive. Walk through them in order. Stop as soon as one fails. The whole list should take a day, not a week.

The twelve checks

1. Strategic fit. Mandate, suburb, typology, price band.
2. Planning certificate. Zone, FSR, height, overlays, heritage.
3. Title and easements. Caveats, easements, restrictions on use.
4. Allowable GFA.Lot area × FSR with an efficiency factor.
5. Comparable sales. Last three months, filtered by typology.
6. Construction rate. Current QS for the typology.
7. Statutory contributions. Council and state, current schedule.
8. Full feasibility. Base case at the asking price, three scenarios.
9. Residual land value. Three hurdles, range of values.
10. Capital availability. Equity and senior debt confirmed for the program.
11. Settlement risk. Time to DA, time to first settlement, time to last.
12. Walk-away price. The number above which you will not bid, decided before negotiation starts.

The pre-bid table

How to set a walk-away price

The walk-away price is the most useful number in the entire process. It is the value above which you will not bid, decided before negotiation, signed off by both the acquisition lead and the CFO. The point is to lock the number in cold blood, before you fall in love with the site.

Anchoring the walk-away price

• The RLV at your target profit on cost (typically 20 percent).
• Minus a buffer for downside risk (typically 3 to 5 percent of RLV).
• Anchored against the asking price and the recent transaction comps.
• Sense-checked against your capital position.

Pre-bid red flags

• Heritage listing or partial heritage. Adds time and unpredictability.
• Flooding or bushfire overlay. Adds cost, sometimes catastrophically.
• Easements through the building envelope. Can sterilise the scheme.
• Contamination history. Adds cost and time, and is hard to fully scope in pre-bid.
• Unstable comp set. If the last three sales are volatile, pricing is a guess.

After the bid is in

Once an offer is accepted, the pre-bid feasibility becomes the base for the contract of sale conditions. Run the full feasibility again with the actual purchase price. Rebuild any assumption that has changed since the bid was prepared.

Practical takeaways

• Walk through the twelve checks in order. Stop at the first fail.
• Set the walk-away price before negotiation, never during.
• RLV is a range across three hurdles, not a point estimate.
• Capital availability is a check, not an assumption.