Smarter Sourcing – Quality not Quantity
It is often said that sourcing agents need 10’s if not 100’s of investors in a list to be able to make enough money to eventually invest in property themselves, but is that really the case?
Let’s take a look at each approach, and the possible differences between them.
To assess the difference between ‘quality and quantity’ let’s refer to them as ‘Spear’ (quality) v ‘Net’ (quantity).
Assessing the Spear v Net Approach
1. The differences
Net approach
Lots of potential investors in a list with basic details of their needs and wants, or no list at all and relying on ‘Lead Magnet’ advertisements on social media channels or private groups; often referred to as ‘Deal Packaging’.
Process:
Gather contact information on as many potential property investors as you can
Hold contact information in a list
Search, filter and find potential deals
Contract signed & ID Verification and due diligence (Seller)
Package up the deal (Lead Advert & Full Presentation)
Send ‘deal(s)’ details out to everyone in your list/Advert on social media channels or groups
First to pay reservation fee secures the deal
ID verification and client due diligence on buyer
Hand over to solicitors for conveyance process to begin
Monitor conveyancing process
Deal sale/purchase completes – Agent gets paid
Spear approach
Working with a much smaller number of investors, you have more in-depth knowledge of the type of investment property that they are looking for and exactly how they will assess any deal; often referred to as ‘Property Sourcing’ or ‘Bespoke Sourcing’
Process:
Network, have conversations and agree to work with an individual investor
ID verification and client due diligence (Investor)
Build your knowledge about them: current experience, strategies, and portfolio
Understand what their plans are, what are they looking for now and how will they assess any deal sent to them?
Collect detailed information about the specific geographical and strategies they wish to invest in
Collect detailed information about how they will assess any deal – spreadsheet and/or formulae
Search, filter and find a deal that matches their specific criteria
Contract signed & ID Verification and due diligence completed on the Seller – secure the Deal
Send full presentation to the potential buyer
Buyer agrees to purchase
Hand over to solicitors for conveyance process to begin
Monitor conveyance process
Deal sale/purchase completes – Agent gets paid
Approach Assessment
Time Management
How much time will you realistically have available to run your business, and will there be any restrictions on days of the week or even hours of the day? All of this can have a big knock-on effect, would it be easier to focus on one investor and not try to please 100’s when you don’t know exactly what they are looking for?
Knowledge and Understanding
The better your understanding of exactly what an investor is looking for and how they will assess any deal is key to saving your time. Instead of constantly selling only one deal to a new, unknown investor (deal packaging), you sell multiple deals to the same person (property or bespoke sourcing). This significantly speeds up the process, allowing you to sell multiple deals in weeks, not months.
Process
Having your buyer/investor registered with you and already gone through ID verification and client due diligence saves time in the process. If you deal package, don’t know your investor, have not completed the relevant ID and due diligence checks on them prior you have to:
Stop the purchase process – do not pass onto a solicitor
Carry out ID verification and client due diligence – before the conveyancing process can be started.
If you don’t operate in this way, you’re immediately in breach of money laundering regulations.
Success Ratio
In the UK, in the first quarter of 2025 approximately 32% of all property transactions fell through, that means the sale/purchase was never completed. If you think about this from the sourcing agent or deal packager perspective, how many deals would have to be found, researched, packaged and presented to get just one deal to complete?
For ten deal sales every year, you will have to find and package at least 13 deals to cover the fall through rate and that’s if you know exactly what your buyer is looking for, what if you don’t?
5. Cash in Bank
Most deal packagers take fees up front to reserve a deal, getting cash in the bank faster, but will it stay there? If you state that the fee is refundable you can’t spend it. It has to be held in a client account; which right now sourcing agents can’t get access to.
The most common reason for redress schemes to make awards against sourcing agents or deal packagers is:
Fee paid upfront – Not refunded as promised
Are you at risk of having an award made against you?
Final Thoughts
If you’re still unsure which strategy you will adopt in your business, or you’re looking at changing things around, ask yourself how much time you have spare to run your business and which of the two will work better for you.
If you are at all concerned, please don’t hesitate to contact the team at NAPSA who are happy to advise and support.
Tina Walsh
CEO NAPSA
