How property deal sourcing works

Property deal sourcing is the service of finding, assessing and presenting investment opportunities on behalf of investors. A deal sourcer does the legwork: searching the market, speaking to agents and vendors, running the numbers and putting the opportunity in front of you in a form you can act on. Here is what the process involves and what you should expect from a sourcer worth working with.

The process, step by step

• The brief: the sourcer learns your strategy, budget, preferred areas and appetite for refurbishment, so the search is targeted from day one.
• The search: opportunities come from estate agents, auctions, direct-to-vendor approaches and personal networks. The best deals are frequently off market, agreed before a listing ever appears.
• Analysis: each candidate is tested against your strategy, including price, works, end value, rent and exit. Anything that does not stack up is discarded.
• The deal pack: a written summary of the opportunity with the figures, the evidence behind them and an honest view of the risks.
• Support to completion: help with offers, introductions to brokers and solicitors, and keeping the purchase moving.

What a good deal pack contains

• The asking or agreed purchase price and the reasons for any discount
• A refurbishment scope and budget, with a contingency
• Comparable sold prices supporting the expected end value
• Achievable rent, backed by local lettings evidence
• Finance assumptions and a projected return
• Known risks, from planning constraints to lease terms, stated plainly

Questions to ask any deal sourcer

• How are you paid, and when is the fee due?
• Is the fee refundable if the purchase falls through, and under what conditions?
• Which parts of the analysis have you verified yourself?
• What happens if the survey or valuation comes back lower than expected?
• Can I speak to investors you have worked with before?

What sourcing is not

A sourcer is not a substitute for your own due diligence, a solicitor or a financial adviser. The deal pack is the starting point for your decision, not the end of it. Good sourcers welcome scrutiny, because a deal that holds up to it is a deal that will complete.