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  • Landlords in Distress

    4 tips and 5 minutes to stop losing £4K to deal sourcers

    In the last few days, I have spoken to three people who have all lost £4K+ to different deal sourcers.

    The first one is a lady who paid a £4K fee upfront to get into a deal. The "deal" took over a year to come to fruition, but finally failed when the mortgage lender found out that a deal sourcer was involved and refused to lend.

    The deal fell through and the lady cannot get her money back.

    The second story is someone who paid £4K upfront for a deal but the block of flats was found to have severe structural difficulties and no lender would lend on it.

    He asked for a refund, but the deal sourcer tried to get him to accept a replacement deal.

    The client was not happy and asked for his money back, and it has yet to be forthcoming.

    The third story is told in this email. I have removed the sourcer's name:

    I started dealing with Mr. X in Aug 2012, where we agreed that I would pay him a monthly fee of £500 and in return receive 5 properties over the year through his company XXXXXX Ltd.

    To date I have paid £4000 in fees and received one property (£500 x 12months =£6000, £6000/5 props = £1200), therefore am owed £2800 in overpayments.

    The one property I did purchase through X, I was told I would receive £2500 back once the mortgage completed to cover the refurb costs that Mr. X estimated at no more than £1500 along with £995 I paid to X Ltd to help the vendor with their mortgage payments + survey fee of £495, which Mr. X said I would get back on completion. The refurb has actually come to £6981.21 (I had to take out a 10k loan). Total costs = £11,271.21.

    Although I have incurred other costs dealing with Mr. X along with a lot of stress & anxiety I will only be claiming for £2800+£2500 - £500 (he paid me recently after I left a voicemail almost in tears about this situation), which = £4800. Mr. X has told me on many occasions that the money has been transferred, it hasn’t.


    It seems like my famous Tribes Guide to avoid becoming property shark bait is not reaching enough people!!

    To avoid becoming another of these sad stories, please ALWAYS ensure that:

    1. Any deal sourcer you work with is registered with an Ombudsman Scheme. They are obliged to be BY LAW. Ask for their registration number. If they are not registered, walk away.

    2. Get yourself vetted for finance BEFORE handing over any money. Any mortgage broker would be happy to review your financial situation and advise if you will qualify for BTL lending.

    3. Ask if all monies paid upfront to he deal sourcer are paid into an escrow account. If not, do not proceed.

    4. Do not pay any large fees upfront. It is acceptable to pay a small fee of £500 to £1000 to show your commitment to the deal, but no more than that. Pay on completion, so that you are paying for results, not promises.

    My 5 minute due diligence regime will stop you getting involved with unscrupulous operators.

    5 minutes to stop losing £4K sounds like time well spent to me and could save a lot of heartache and stress too!

    Here is an example of what 5 minutes of due diligence can turn up ... Example.
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