What are the Pros and Cons of using a Property Sourcing Agent?
By Hearn Beaumont Property
1. Access to Off-Market Deals
Property sourcing agents typically have access to a range of exclusive off-market deals, which are not available on the open market, or on major portals such as Rightmove or Zoopla. Purchasing properties off-market can often mean lower prices, more flexibility, and less competition.
2. Negotiating the best price
Property Sourcer's usually have both experience and knowledge of negotiating property deals; utilising this could mean you gain a better price for your investment, and counteract any sourcing fees incurred. Additionally, the sourcing agent will likely have good knowledge of local prices, and be able to better determine what is, and is not a good deal.
Depending on your requirements, and the level of risk you are willing to undertake, finding a property to purchase can be a very time consuming endeavour. It could take you 20, or even 30 viewings to find the right property for you. Additionally, most estate agents are open between the standard hours of 9-5, so if you are an investor in full time employment, it would likely be very difficult for you to attend viewings, complete due diligence, arrange builder quotes, surveyors etc. A sourcing agent can search for properties on your behalf and provide you with a shortlist of the best options, allowing you to compete with full time investors who may wish to purchase the same properties as you do!
4. Professional Network
Property Sourcing Agents have access to a wide range of professionals such as conveyancers, surveyors and solicitors which can be helpful in the process of securing the best deal. Through a trial and error process, most sourcing agents use a few professionals in each area before they find their power team. So the likelihood is, if you stick to professionals inside the sourcing agent’s network, the purchase will be much more efficient.
5. Local Knowledge
Through years of research, experience and mistakes... the best property sourcing agents have usually acquired an in-depth knowledge of the area they serve. They should know which strategies work in certain areas, which areas to avoid, transport links, schools, local amenities and the best up and coming areas in which to invest.
6. Risk Mitigation:
A good sourcing agent can help you to minimise the risks associated with property investment. There are many things that can go wrong when purchasing a property, from legal issues, to physical issues with the property such as Japanese knotweed, structural cracks, damp etc. A sourcing agent may have past experience of a range of issues you could suffer when purchasing an investment property, and hence be able to mitigate the risk of these occurring before you go ahead.
1. Sourcing Fees
If you are using a sourcing agent, you can expect to pay sourcing fees when purchasing a property, which will reduce your ROI, and increase the initial start up capital required. Make sure to check the sourcing fees/ sourcing agent’s fee structure before purchasing the property.
2. Limited Availability
Property sourcing agents are not always available to work with buyers or sellers who require their services. They may only have the capacity to work for a certain number of buyers at any given time and still provide a good service, so you may have to be placed on a waiting list to work with certain sourcing agents.
3. Potential for Fraud
There is a risk that the agent may not be legitimate and fully compliant. Make sure to request full compliance information before purchasing a property through a sourcing agent.
4. Lack of Knowledge of a range of areas
An advantage of using a sourcing agent is that they typically have good local knowledge of their specialist area. However, this means that they often lack knowledge of areas outside of their area. If you are an investor who wishes to purchase properties in various different areas, you may need to use multiple sourcing agents.
5. Lack of Transparency
Transparency is key to operating as a successful property investor. Trust in your power team is absolutely crucial when parting with large sums of money to purchase properties. Sourcing Agents can often exaggerate figures, or lie about how good the deal is just to get it over the line, and earn their fee as quickly as possible. The best way to mitigate this is to get educated. Find a mentor, do some research, training, and improve your knowledge of property; in particular, improve your ability to analyse deals, so that a property sourcer with bad intentions cannot pull the wool over your eyes for a quick fee!