Deal sourcing fees explained

Fees are the question every investor asks first, and rightly so. The way a deal sourcer charges tells you a lot about how they work. This guide explains the common fee structures in the UK, what you are paying for and what to check before you commit.

Common fee structures

• A fixed sourcing fee: a set amount per deal, agreed in advance. Simple, predictable and the most common model.
• A percentage of the purchase price: scales with the size of the deal, which can suit larger purchases but is harder to compare between sourcers.
• A reservation or commitment fee: a smaller payment made when you decide to proceed, with the balance due on exchange or completion.
• Consultancy or retainer: a fee for ongoing support, strategy and deal reviews rather than for a specific property.

When fees are paid

Most sourcers ask for a reservation fee when you commit to an opportunity and the balance at exchange or completion. The important questions are whether any part is refundable if the deal falls through for reasons outside your control, and what happens if a survey or valuation changes the numbers. Get the answer in writing before you pay anything.

What you are paying for

A sourcing fee buys time, access and analysis: the hours spent searching and negotiating, relationships that surface off-market opportunities, and a deal pack that has already been stress-tested. On a well-sourced deal, the discount to market value and the time saved are usually worth considerably more than the fee. On a poorly sourced one, no fee is cheap enough.

Red flags

• Pressure to pay a reservation fee before you have seen the full figures
• Vague or verbal terms with nothing in writing
• Refusal to explain how comparable values or rents were arrived at
• Fees that only make sense if you buy whatever is put in front of you

How we approach fees

Our sourcing fees are discussed openly before you commit to any opportunity, with the scope and next steps set out in writing. If an opportunity does not fit your strategy, there is no fee and no pressure.