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With individuals and companies setting up as property sourcers or property finders in the UK, you could be asking yourself whether you are missing a trick by not using one. But what exactly does a property sourcer do, how should they go about it, and do you need one?
What do they do?
A property sourcer does just that – they source properties for clients. This is usually on behalf of an investor rather than the end occupier. The scope of the property sourcer’s work varies greatly from sourcer to sourcer and it’s important that you think carefully about what you want to get out of it to make sure you pick the right sourcer for you.
Some sourcers simply source a wide range of properties with no specific criteria to follow, resulting in a “shopping list” of properties that they consider as potential investment properties to offer to any would-be investors.
At the other end of the scale, some sourcers will have a full information gathering session with a specific investor to ascertain the type of properties sought, the return on investment required, information on the local area and whether the area is attractive to potential tenants, thereby compiling a specific criterion to fulfil. The sourcer will then source only those properties that match the criteria, and which are specifically tailored to the particular investor.
Which route you take here will depend on what you are looking for and – of course – how much you are prepared to spend on sourcing fees.
Sourcers charge for their services in several ways and it is important to ensure you fully understand the terms before signing any sourcing agreement. The sourcing agreements that we are instructed to draft usually contain one or sometimes a mixture of the following charging methods:
How do they do it?
Perhaps it would be better to ask how they should do it and to consider what due diligence you should be carrying out when you are looking to engage a sourcer.
An individual or company offering property sourcing services should at least be registered with a property ombudsman (such as The Property Ombudsman – TPO), have the appropriate professional indemnity insurance in place and ought to also be registered with the Information Commissioners Office for data protection purposes.
In addition to the above legal/regulatory standards, a good property sourcer ought to know their search location inside and out and have a solid handle on the state of the property market within that area so that they can pass that information on to you quickly and efficiently.
An effective property sourcer should also have (and be able to demonstrate) that they have a solid and strong network of property professionals, investors, and other property sourcers, so that they can legitimately bring the best properties to the table before they are marketed to the general public. They should be able to present opportunities to you that you may not otherwise have been able to discover yourself.
Do I need one?
In its simplest form, property sourcing is not a difficult concept, and it’s arguable that everyone potentially has the ability and – to some extent – access to the information available to source prospective investment properties. However, it often comes down to whether you have the time or the knowledge to do so.
Good property sourcers spend all their time looking for profitable investment properties and opportunities, have an in-depth knowledge of the search location and its market, and will either have the opportunities already available to them or are able to get in touch quickly with one of their contacts to find the opportunity for you.
The consensus amongst property professionals appears to be – if you have sufficient knowledge of the property market in the target area or sufficient time to research the market and search for properties yourself, then that is what you should do. However, if you are time poor or lack experience or knowledge of the market, then a property sourcer may be beneficial.
That said, always do your research to find the right property sourcer for you. Ask for testimonials or evidence to reinforce their claims and always read fully and understand the terms of their sourcing agreement. If they do not have one or it does not make sense, ask yourself why (and then send them my way for drafting services).