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Estate Agent or Sourcing Agent

Estate Agent or Sourcing Agent

What is the Difference?

Estate Agent

Whilst most of us have more than likely used the services of an Estate Agent for selling our own homes, have you ever really thought about the ‘service model’ used by them to ‘broker’ a deal and get paid?

  • Estate Agent engages with a seller
  • Agrees sale price and seller signs a ‘Sole Agency’ type agreement
  • Markets the property
  • Carries out viewings
  • Receives offers
  • Submits offers to Seller
  • Seller accepts an offer
  • Purchase completes
  • Estate Agent receives a fee from the Seller, usually a percentage of the sale price achieved

In contrast to the estate agency model for brokering a deal, a property sourcer / deal packager / property-buying agent works in a different way:

Sourcing Agent

  • Sourcing agent engages with either the seller or another agent
  • Agrees the purchase price and if direct to seller obtains either a ‘Sole Agency’ or ‘Option’ Agreement
  • Markets the property to clients
  • Investor accepts the deal
  • Deal passed to solicitors
  • Purchase completes
  • Property Sourcer receives a fee – usually from the Investor and could be either a percentage of the sale price achieved or a fixed fee, dependent on the agreement with the Investor

The brokering process may not appear to differ hugely, but the effect that this can have on achieving your goal could be huge, for example, lets say that you are an investor looking for a two bedroomed ‘Buy to Let’ type property and you decide to work with a local estate agent who has agreed to help you find a suitable property.

If we look closely at how an estate agent works, especially how they get their fees this should become apparent. Their fees are paid by the seller, so who do you think, quite rightly of course, their loyalty is to; yes the seller.  They must provide the best service that they can for the seller and that means achieve the highest price possible, which is usually the opposite of what an investor wants of course.

Now by comparison because the property sourcer usually gets their fee from the investor, their loyalty is to them and so they negotiate the best deal that they can for their client; which usually means a lower purchase price; overall potentially providing a better investment return.

So, if you are an investor and want to build a portfolio or buy a development remember, a sourcing agent’s loyalty is to you. If you want to know more, please get in touch below or give me a call on 07505 702 962.