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  • Buy-to-Let

    Sourcing Agent Fee

    I will  be spending a whole day with two different sourcing companies  in two different parts of the country not local to us. We could do the journey in one day but will probably drive there the night before.

    Company One is putting us up overnight for free (we initially pay they refund when we check in). This company has multiple agents working for them. The whole day is free.

    Company Two is a one man company and is charging a fee which will be refunded from the sourcing fee if we go ahead with a purchase.

    Both companies will be showing us around the area where best to invest where to avoid etc

    My question is it acceptable for such a company to charge a fee and if so what would be reasonable? We are at the end of the day spending a whole day with them in an area which we are not familiar with and gaining their knowledge of the area.
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    I think that sounds fair on both counts Larry.

    For the second one, I would think somewhere around the £500.00 mark would be reasonable.

    For your protection, please check they are both registered with an independent redress scheme - there are two they can join, the Property Ombudsman or the Property Redress Scheme.  If they are not members, then they are trading non-compliantly and you will have no redress if something goes wrong.

    ​Hope that helps?

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    Hi Thanks for all your replies so far.
    The companies are based in the north east and north west.
    Vanessa interesting that company two is part of the PRS and one does not appear to be. Both don’t appear to be members of TPO. Briefly reading the requirements of property agents they are required to join a government authorised consumer redress scheme. If company two is not a member of either would they be acting illegally?
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    They only need to be a member of one scheme.

    If they are not, they are trading non-compliantly and can be fined a maximum fine of £5K by Trading Standards.

    They also need to be registered for anti-money laundering with HMRC and have PI insurance in place.  Many of them don't and they are far riskier to deal with.

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    What area is it?

    Always, always do your own DD and research. Even if that means clarifying their comments with a local EA.

    Though an not saying the EA will have the knowledge either.

    As for a fee, I would strongly recommend you ONLY pay the agree sourcing fee on COMPLETION and not a penny in advance.

    Too many sources with no property knowledge are being churned out and are selling a standard Rightmove deal for £3500. Providing no real DD or seeing the deal through. Understand what the sourcers actually provide .
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    Do a search for the "Ten Streets Strategy" on this forum, then you won't need a sourcer to show you around.
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    Good service merits a fee. Hard to say what is right, lots of home work on the area and options, AirBnB etc shows other aspects and a guide to the area as does tourism sites.

    We identified an area in a town which was very unrecommended yet a smart promotion got us premium rents for a very specific reason. In every case we are aiming at higher spec  including furnishings and decor. Make it look good as I am sure a basic decision to rent in made on the initial impression.

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    I agree, a good service does merit a fee. Though I do struggle with 500 for a tour guide. The ground work can be done and the benefits reaped when something tangible is delivered. Also agree 100% about the fine detail with property specification
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    To be fair the fee is not as much as £500 and I would expect a company or an individual to charge some sort of fee for their time and knowledge.

    But on the other hand when questioning my letting agent team in an area we have already invested in the past they did tell us where to and not to invest as when we did they would collect another monthly agent fee.

    So I do agree £500 does seem steep.
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    For clarification, I thought £500.00 to be the maximum.  £250.00 would be reasonable I think.

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