Ask most experienced developers what separates the ones who succeed from the ones who don't, and the answer is rarely about finding better deals. It's about how thoroughly they understand the deals they do pursue — before they commit.
The most common mistake isn't buying the wrong property. It's going into a deal without full visibility on what it's actually going to cost, and without anything pushing back on your assumptions.
The optimism problem
Everyone who looks at a development opportunity for the first time does the same thing. They work out the purchase price, estimate the refurbishment cost, look up comparable sold prices, and calculate a profit. The number looks good. They proceed.
The problem is what's missing from that calculation. Finance costs. Stamp duty. Legal fees. Broker fees. Valuation fees. Agent fees on the sale. The cost of the extra two months the project took. The cost of the sale price coming in 5% below expectation.
Each of these individually is manageable. Together, they can turn a project that looked profitable on paper into one that barely breaks even — or worse.
What a proper appraisal covers
A thorough deal appraisal works through every cost category in sequence, not just the obvious ones. That means:
- Purchase costs — the price, plus SDLT at the correct rate (5% surcharge applies for additional dwellings since October 2024), plus legal fees
- Finance costs — the arrangement fee, monthly interest rolled up or serviced, and the exit fee, calculated over a realistic project timeline
- Build and contingency — your estimated refurbishment cost plus a realistic contingency buffer, typically 10-15%
- Sale costs — agent fees, legal fees on the sale, and any costs associated with presenting the property
- Profit threshold — what margin you need to make the project worth the risk and the work
Only when all of those are in the same model can you see whether a deal actually works — and at what sale price.
The sale price is the number that matters most
The output of a good appraisal isn't just "here's the profit." It's: here's the minimum price this property needs to sell for to hit your target margin. That number is what you then test against the market — looking at comparable sold prices, current stock, and whether that figure is realistic.
If comparable properties in the area are selling for £280,000 and your appraisal says you need £310,000 to make the numbers work, you have your answer before you've spent a penny.
This is exactly what the Corebal Deal Appraisal module does — it works through every cost, shows you your required sale price, and lets you test what happens if the numbers shift. The sensitivity analysis is often where the most important decisions get made.
The other half of the problem — assumptions
Even developers who model their costs thoroughly sometimes fall into the second trap: building their appraisal on best-case assumptions and not testing what happens when things go wrong.
What if the refurbishment takes three months longer than planned? What if the sale price comes in 8% below your target? What if build costs are 15% higher than quoted? None of these are unusual outcomes — they're normal parts of development.
A robust appraisal doesn't just show you the upside. It shows you the range of outcomes, and whether you can survive the downside ones. That's what gives you the confidence to proceed — or the information to walk away.
What this looks like in practice
Before you make an offer on anything, you should be able to answer three questions precisely:
- What is the minimum price this property needs to sell for to hit my target margin?
- Is that price supported by comparable sales in this area?
- If costs run over or the sale price comes in short, what does my profit look like — and is it still acceptable?
If you can answer all three with confidence, you're in a position to make a decision. If any of them are vague, you're not ready to offer yet.