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I am in the process of purchasing a new build property through a property / deal sourcer. I've paid the sourcer a portion of their fee in good faith to secure the property at the discount they have promised. However after viewing the property some doubts have been left in my mind. I would appreciate your advice.
During the viewing, the developer hinted that while the property is being sold at a "discount" from its asking price, I am still paying about £5,000 more than what a normal investor would. He was also surprised that I had to pay a £3,500 sourcing fee to secure the property. That is a total of £8,500 more than what most investors would pay.
While doing my due diligence in the pricing of the property, I came across an ad in Zoopla which had the same property being sold at £145,000. According to the property sourcer that is an older listing and is no longer relevant as the property has been firmly priced at £150,000 (this is without the property sourcers discounts) When I called the ad to verify if this was the case, the estate agent did confirm that the property was indeed for sale at £145,000 and the listing was up to date and accurate.
So as you can see some numbers don't stack up. Property was advertised to me by the deal sourcer at £150k (before the discount) when it is being advertised by an estate agent online at £145k and judging from my conversation with the developer I'm paying around £5,000 more than a normal investor would (£8,500 with the sourcing fee).
While the difference between the property sourcer and the online estate agent's is £5000 this ultimately impacts the discount that I am paying the sourcer to secure as I won't be getting such a great deal once you include their fees, and that is ultimately what I am paying for.
This is my first proper BTL so any advice would be greatly appreciated.
I have only read the first paragraph. NEVER pay before completition and ALWAYS through a solicitor. Money laundering purposes. I'll read on. Plus ALWAYS do your own DD.
You spent your time on due diligence for the property price but forget the other. Why pay someone to source the property, go direct to the developer and ask for a discount. It may be hard , but if can't get to grips on finding a property what hope do you have in becoming a landlord with all the rules and regulations you have to follow. Another lamb to the slaughter comes to mind.
I don't know how to say this but you have been conned. I do this line of work and there are ethics and the correct way to do this.
My advice would be to contact the "property sourcer" and demand your fee to be returned. Otherwise you will do to the Property Ombusman. Does the sourced have an official Facebook page or website. How did you come across this person. If they don't return your fee, I would provide professional feedback on their service.
Have you go evidence of the transcript. For example emails?
NEVER pay before completion and always do your own DD.
Vanessa Warick will also provide some excellent feedback regarding this. She won't be happy.
Thanks for the constructive reply. I've paid part of their fee and I do have emails with regards to our conversation to back everything up.
By the sounds of it I am being conned and this is a shame as I am prepared to pay a full finders fee if I can secure a property at a great discount. However the discrepancy of the prices has got me on high alert now. Yes, this company is a member of the Property Ombudsman group and they have a website.
Is the sourcer a member of trading body's relevant to this this industry?
Yes, they are a member of the Property Ombudsman.
Ignore negative feedback. I see you never mentioned the word landlord and some of the best investors use people to source properties. You can't be aware of or negotiate all deals.
Everyone makes mistakes when they start off anything. Still make mistakes today. Just try and make sure they don't cost me or anyone else a lot of money.
Getting back. I would request the fee back, though if you decide to purchase the property you may be tied into the deal. Either way sounds like you are paying too much anyway. So walk away or renegotiate. Another deal will present itself to you.
Out of principle I would request the fee and make a complaint about incorrect information being provided.
Did they provide further information that could be incorrect. For example ROI figures?
Ultimately don't let it put you off.
A property sourcer: Someone who has special knowledge of a sure-fire cheap bargain to make a profit out of..... but some secret reason for not buying it himself.... Hhmmmmnnnnnn something doesn;t sound quite right there....
This story has just been posted on another thread. Strange timing so maybe the Universe is trying to tell you something. It may help you make up your mind.As far as I am concerned, the deal sourcer has not achieved any discount for you and has provided no service whatsoever.Walk away and demand your money back. The deal sourcer has lied to you, and there is no way forwards from that.
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
You have been unfortunately seduced by a salesman
This happens to all of us at some stage in our lives so don`t feel too bad
We learn and move on
You have spotted it at a relatively early stage so count your blessings
And now your fears have been confirmed now by PT folk
Construct a well thought out e mail withdrawing from the arrangement and claim compensation
Complaining is an art in itself . Include your evidence in readable chronological order
Start low key, and if you get a rebuttal , gradually ratchet it up
When all done start again - but with a fresh pair of eyes
Check the new sourcer out better before you engage their services
Or maybe use this experience to decide to do your own sourcing
My very first house I was sold was a dud
I was shown 8 and the agent successfully got me to buy the one he wanted shifted the most
But at 23 I learnt a valuable lesson that some wont learn till 30 years later
I used that lesson to learn how to invest better next time
So I lost 1K but made 2K as a result.
Jonathan Clarke. http://www.buytoletmk.com