Lots of people choose to become a property sourcer every day. Some encouraged by the prospect of significant capital that may not be achievable in a fixed full-time position. Others by the flexibility of working from home, travelling, or being able to spend more time with family.
I’m sure you can guess though, there’s a lot more to it. Which is why we’ve explored in more depth, plus what’s involved should you choose property sourcing for you.
Let’s Start With – What is a Property Sourcer?
A property sourcer is someone who has in-depth knowledge of their chosen geographical area. They also have an excellent understanding of a few property strategies that work and don’t work within that area.
They are in a unique position to help clients (a.k.a property and land investors) with their knowledge, to find off or on market properties/projects that meet their criteria for various objectives.
An agent can save an investor time and energy, by having carried out research and have to hand information about the property market in their area.
They can also provide specific information regarding schools, access to all commute links, shopping and other local amenities and facilities and crime figures for the area.
The idea is the sourcing agent ‘knows their patch’ incredibly well, not just from the get go, but stays up to date on the latest goings on, council plans, new developments, or even keep track of empty properties in the area. Investor rely on this in depth knowledge, as it may not be something they can keep track of themselves.
How Are Sourcing Agents Different to Estate Agents?
Unlike Estate Agents who generally represent the seller. Property Sourcers focus on the investor and their specific needs.
In the process of an sourcing agent, they take a fee from an investor at the start for completing due diligence and when a deal is completed – you can find out more about sourcing agent fees here.
Estate Agent = Fee from the Seller on sale
Sourcing Agent = Fee from the Investor after deal closed
Why Choose to Become a Property Sourcer?
Fast-Growing UK Property Marketing
The UK property market has long been seen as one of the largest and fastest-growing in the world – and not just in London. With this growth and the lure for investors to select from all areas of the country, the demand for professional property sourcing agents has the potential to soar.
If you niche your areas and strategies, you will have more chance of finding the right sort of deals for your investor. Rather than trying to cover all strategies and all areas of the UK – putting yourself up against every other sourcing agent and deal packager out there!
Flexibility of Work
Established sourcing agents have the choice to go ‘full-time’ and pick and choose their hours of work – which can be of great appeal to many. Other than building relationships with investors and estate agents, who may prefer standard working hours, you can generally email or research in your own time.
Whether you’re working from home or a shared workspace, you have the freedom to choose your hours and work around, spending time with your family or other commitments.
Range of Investors to Meet
As a property sourcing agent, you’ll come into contact with lots of differing potential clients, enabling you to choose the clients/investors you wish to work with by getting to know them and what they are looking and why.
This variety helps to keep things fresh and exciting. You’ll have the opportunity to meet new people and work with some of them to help achieve their property goals.
Continuous learning opportunities
It’s important you stay in the know on your patch and across the country, so you’ll need to keep abreast of the latest trends, property legislation, regulations and market changes – which means you’re constantly learning and updating your knowledge of the sector and staying professional as well as avoiding being fined.
Whilst there are numerous training courses, seminars, and conferences available, it’s important to make sure that you do your due diligence to make sure you are getting the information you expect and need to keep yourself and your business operating ethically, legally and compliantly.
Build Capital to Invest Yourself or Retire
Most sourcing agents we speak to use sourcing as a ‘stepping stone’ to being able to invest themselves. You can use this to get deals over the line, learn from projects and investors, before becoming a fully fledged investor yourself.
Others prefer to use this in addition to their pension, or current work, to build a larger pension pot for retiring and planning for the future.
There are many reasons why people choose to go into property sourcing, however there is one important factor to remember….
Sourcing Isn’t Get Rich Quick
Unlike what can often be posted online, property sourcing – more often than not – isn’t an avenue to get rich quick. There is a lot more to it than finding deals for investors, such as what was alluded above.
It takes a significant amount of time to understand your ‘patch’, find investors, and then find the right deals that match your investors criteria.
Not to mention, once you have the right deal, the sale has to go through which in 2023 took an average of 6 months.
However, if you choose to become a property sourcer and set up your business the right way from the get go and practice the principles of building strong and trusting relationships with your investors, you will be putting yourself miles above the majority of agents operating in the UK.
Investors are calling out for professional and compliant sourcing agents, as unfortunately our sector has seen a lot of negativity – hence HMRC clamping down on our sector.
You Can Build a Profitable and Long-Term Sourcing Business
It’s not all doom and gloom. You can choose to become a property sourcer and build a successful sourcing business if you allow yourself the time to get your house in order.
We have agents on our platform who have generated enough income to leave their full-time roles, and have built more than enough capital to invest in property themselves. They have become successful by building trusting relationships with a number of investors and know exactly what deals to present to them when they arise in their patch.
It is possible, with the right compliance, training, processes and guidelines in place.
If we haven’t lost you by this stage and you’re still very much interested in property sourcing or deal packaging, we would recommend trying our Free Compliance Business Set Up to give you an idea of what you need.
How Do You Set Up Your Sourcing Business Compliantly?
A good, professional agent has taken the time to set up their business from the outset to run legally and compliantly and not cut corners.
They have done this by gaining a good understanding of the dozen or so pieces of legislation and regulations that govern the sector, as well as the following:
Correct Public Indemnity (Pi) insurance – you can find out more of what to look out for here.
Redress Scheme Membership – The Property Ombudsman (TPO) or The Property Redress Scheme (PRS)
Registered for Data Protection – Information Commissioners Office (ICO)
Registered for Anti-Money Laundering (AML) Supervision – HMRC
As a professional, legally operating agent you must also have all the correct, relevant and up to date contracts and documents in place to show how your business works and the you must know what the documents and contracts say and mean.
In addition to your registrations with ICO and HMRC, you need to show supporting training for Data Protection and AML.
Important Note – any director or shareholder of your business must also have this as provable training (it cannot be done as a company).
If you don’t complete all of the required compliance criteria, you are liable to receiving a fine as well as having a follow-up online audit of your business carried out by the HMRC AML compliance team via a video call.
So if you do choose to become a property sourcer, don’t treat it as a hobby, because it will cost you like a hobby, instead treat it as a professional ethical business and it will pay you as a business.
