How Property Deal Sourcing Works: From Brief to Completion

Finding a good investment property takes far more time than most people expect. Sorting through listings, checking sold prices, estimating rents and repair costs, viewing houses and negotiating can easily fill several evenings a week. Property deal sourcing is a service that does much of this work for you, but it varies a great deal in quality, and it pays to know how it should work before you sign up.

What a deal sourcer does

A deal sourcer finds investment properties that match an agreed brief, checks the numbers and passes the best ones to the investor. The investor then buys in their own name, with their own solicitor, broker and surveyor. A good sourcer will also turn deals down when they do not stack up, rather than pushing every property they find.

The work usually covers off-market and pre-market stock, auctions, portfolio sales and motivated sellers, as well as properties listed with agents. Specialists offering a property deal sourcing service will normally agree a written brief with you before they start searching.

How the process works

1. Brief: budget, strategy, areas and the type of property you want.
2. Search: daily monitoring of agents, auctions and off-market sources.
3. Screening: sold prices, rental demand, photos, floor plans and EPCs.
4. Analysis: comparables, achievable rent, purchase costs, repairs and risks.
5. Viewing: a room-by-room inspection with photos.
6. Offer and completion: negotiation, then liaison with your solicitor and broker.

What a deal pack should include

The deal pack is where a sourcer shows their working. It should never be a single headline yield. Expect to see comparable sold prices, evidenced rents from similar lets, a full breakdown of purchase costs including stamp duty at the higher rates for additional properties, a repair estimate, notes on the area and any licensing or planning rules, and a clear list of risks.

Local knowledge matters here. In a city such as Derby, for example, parts of the city are covered by planning rules on shared houses, and larger HMOs need a licence. Anyone looking at buy-to-let in Derby needs those checks done before an offer is made, not after.

Fees and paperwork

Sourcing fees are usually either a fixed amount or a percentage of the purchase price. The safest arrangements have the terms agreed in writing up front and the fee payable on completion, so you are not paying for a deal that falls through. Before signing, ask whether the sourcer:

• belongs to a property redress scheme
• is supervised for anti-money laundering
• is registered with the Information Commissioner's Office
• holds professional indemnity insurance

When sourcing meets partnership

Some investors have the money but not the time to manage a project, while others have the experience but not the capital. Sourcers sometimes introduce the two, and property joint ventures can work well when both sides take independent legal advice and agree everything in writing before any money moves.

A good sourcer saves you time and, just as importantly, stops you buying the wrong property. For more on buy-to-let, HMOs and other investment strategies, see our property investment category.