The Road to Becoming a Property Sourcer in London
Have you been dabbling in the idea of property investments but unsure how to develop a business out of it?
Then property sourcing may just be your next venture!
This guide will direct you towards the essential steps you can take to becoming a property sourcer and outlines considerations to keep in mind along the way.
What is Property Sourcing?
A property sourcer, or property sourcing agent, is someone who puts together property deals to then sell to property investors. As a property sourcer, you will act as the middleman, negotiating property deals between the buyer and the seller.
You can either become an independent property sourcing agent or join a sourcing company that specialises in property management. The process of becoming a property sourcer may vary, depending on which route you choose.
Where to Start
It is true that anyone can be a property sourcer. But it is also true that in order to succeed, you must have a determined mindset and a knowledgeable background in property investing.
So, before diving straight in, here are 5 questions to ask yourself to make sure you are up to the task.
- Do I have the marketing and administrative experience needed to navigate property sales and generate leads?
- Can I confidently talk on the phone or face-to-face with potential clients?
- Am I a strong negotiator?
- Am I someone who takes charge of situations?
- Do I have enough available time to dedicate to starting a business?
Before getting started, you should analyse your strengths and weaknesses to determine potential areas you can target for improvement.
Creating a successful business requires you to be knowledgeable about your niche. It will only prosper if you have the experience needed to understand the property market.
Similarly, having strong communication and negotiation skills is essential when working with customers and converting leads into deals.
Because finding deals and meeting with investors takes time, you should double-check to make sure you can commit to long hours, especially when starting.
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The Legal Side
Once you commit to starting a business, it’s essential to make sure you are aware of the legal requirements associated with property sourcing. Failing to abide by all the necessary steps may put your business, and self, at risk.
Below are the crucial legal steps you must follow to become a property sourcer.
- Register with HM Revenue and Customs (HMRC)
- Register with the Information Commissioner’s Office (ICO)
- Register with a professional body, such as the National Residential Landlords Association (NRLA)
- Register with the Financial Conduct Authority for Anti-Money Laundering
- Register under the Data Protection Act
- Get Insured
Getting your legalities in order before beginning will be the basis of your success.
HM Revenue and Customs is a government department dedicated to collecting UK taxes and monitoring payments and customs authority. HMRC collects money to help pay for public services and provides financial assistance to families and individuals.
Registering with HMRC is a part of the property sourcing process because, in the eyes of the government, property sourcing falls under the same category as an estate agent.
Property sourcers act on behalf of the buyer, categorising them under the Estate Agents Act of 1979. Therefore, the same rules apply and registration with the HMRC, as either a limited company, sole trader, or limited liability partnership, is required.
Another component of registration lies in the ombudsman schemes.
The ombudsman schemes are three outlets for customers to raise complaints if they are unhappy with how a situation is handled. The ombudsman is the next stage after an initial complaint to you, the property sourcer.
There are three property ombudsman schemes, Ombudsman Services, the Property Ombudsman (TPO), and the Property Redress Scheme (PRS). Property sourcers must become a member of at least one of these 3 schemes as a way to guarantee buyers security.
Information Commissioner’s Office
The Information Commissioner’s Office is a non-departmental public body that reports directly to Parliament. Registering with the ICO is a crucial step because collecting and holding personal customer information requires a data protection license.
To gain a license, you can visit their website to fill out the necessary paperwork and pay a fee.
National Residential Landlords Association
The NRLA is a membership organisation for private residential landlords. By registering with a professional body, such as the NRLA, you gain access to a broader society of landlords, property expertise, a support team, and training resources to help grow your business.
Financial Conduct Authority
All business schemes must also be registered with an anti-money laundering scheme. This can be achieved through the Financial Conduct Authority, the primary conduct regulator for financial service firms and financial markets in the UK.
Registering with an anti-money laundering scheme is an essential step because the property industry is a common hiding place for money launderers.
By registering your business with the HMRC’s anti-money laundering legislation, you become responsible for reporting any suspicious transactions and may be subjected to fines if you don’t comply.
Data Protection Act
The Data Protection Act is the UK’s way of regulating how personal information is used by companies, organisations, or the government. Registering with the data protection act through the ICO allows the government to hold you responsible for using personal data.
Property sourcers typically store information regarding their buyers, sellers, and landlords.
Failing to comply with all ICO requirements or incorrectly setting up your business could result in legal consequences, so pay close attention to detail!
Some of the data protection principles covered by the Data Protection Act include ensuring that information is
- Used fairly, lawly, and transparently
- Used for specified, explicit purposes
- Used in a way that is adequate, relevant and limited to only what is necessary
- Accurate and, where necessary, kept up to date.
- Kept for no longer than is necessary.
- Handled in a way that ensures appropriate security, including protection against unlawful or unauthorised processing, access, loss, destruction or damage
More sensitive information related to race, ethnicity, religion, political opinion, and health require more robust legal protection.
Mistakes happen― that’s life.
And when they do, insurance is there for you.
There are two types of insurance you should consider investing in; professional indemnity insurance and public liability insurance.
Indemnity insurance protects your business if clients claim your work is faulty. Instances of negligence, breaches in confidential information, and poor advice, can all result in financial losses for your client and a giant headache for you.
Public liability insurance is another type of business insurance that covers claims made by the public with concern to your business. This insurance covers personal injuries, loss or damage to property, and death. Because public liability only applies to incidents on property’s you own, accidents in other locations won’t be covered.
Getting the correct type of insurance is essential to avoid potential issues and the possibility of getting sued.
Photo credit: inextcrm.com
Developing Your Business
After sorting out the proper legalities, you can begin to develop your business.
This may include hiring a legal expert to develop a Terms of Business document, outlining what your business offers, and creating a Terms and Conditions document. These documents are helpful to new clients because they provide information regarding your unique method of business and protect you from claims of misrepresentation.
When growing your business, it may also be useful to determine a niche. Finding a unique place in the market is advantageous because you can specialise in one specific category of property investment and become the best in it, rather than spreading yourself too thin.
The first month of operation is typically used to set up legalities and get official documents in place. As you grow, you will be able to start finding vendors and suitable investors through networking.
Photo credit: vectorstock.com
The next crucial step is creating connections. There are a few different techniques you can employ to finding new leads and garnering relationships.
Attending local networking events is one way to meet new people and possibly find your next buyer or seller. They are also an excellent opportunity to get a feel for local competition.
Joining groups on social media is a great (free!) way to get connected with others who share similar interests or are interested in your services. There are many groups on Facebook dedicated to property sourcing that you can network with and personal message.
Although this method may take more time and requires some dedication, it’s still a fantastic option if you are looking for a free way to meet people.
Similarly, you can find property forums as a way to connect with people and share your thoughts on relevant topics. Forums share information to other users and generate exposure to content that you contribute.
Building a network of investors will simultaneously create a go-to email list of investors for you to reach out to when finding sellers.
Another way to find connections is by creating a “Google footprint”. In other words, expanding your presence online will allow people to find you rather than you always finding them. Sometimes this is referred to as building a personal brand.
Building a personal brand allows your customers to get to know you and creates a feeling of trust between you and your clients. The more a person feels like they know you, the more likely they are to trust you with their business.
Presenting yourself online also increases your transparency.
Creating a personal blog with information regarding your expertise is another way to generate organic traffic, increase your find-ability, and create links back to your business.
Generating connections not only grows your business and visibility but also allows transactions to run smoothly by creating a network of fail-safe contacts.
Photo credit: vectorstock.com
Sourcing in London
If you are from London, property sourcing there may come naturally. You already have the advantage of local knowledge and experience.
If you have just moved to London, it may be a little trickier to acquaint yourself, but with a few simple tricks, you can be as familiarised as the local.
The top 3 things you should do if you just moved to London are
- Familiarise yourself with the different neighbourhoods throughout London to gain a sense of location. Your customers may be interested in specific areas or attractions within other communities.
- Map out the school zoning districts. When trying to sell a property, many clients may prefer a specific school or zoning district.
- Orient yourself with pedestrian and commuter traffic. Recognising the busier vs quieter areas may be an essential selling point.
Still need help navigating the property market? Here at Pearl Lemon Properties, we lead by example, so get in touch today to learn more about property investing and sourcing!