Although there are similarities, a UK property deal sourcing agent and a real estate agent are different types of property specialists. Many people think that an estate agent does exactly what a property deal sourcer does, but this is not true.
While estate agents are motivated to work with both buyers and sellers in one way or another, property deal sourcers largely focus on working "for" the buyer. For example, finding them properties (or "sourcing" properties) they can buy quickly before they get sold by someone else.
This article explains the differences between these two services so you know what to expect when you talk to your next traditional estate agent or property sourcer. This is especially relevant if you are the buyer, given one of the two professionals here will almost certainly focus more on getting you a better deal!
What is a real estate agent?
A real estate agent helps you locate, inspect, negotiate for and secure a property. Playing the "broker" role, these professionals may also help manage your property after you've purchased it. This is often the case if you're based outside the UK and buying an investment property.
UK estate agents will advise you on what properties are available for sale in their current portfolio. In other words, if an individual or company wishes to sell a property, they would typically approach a local estate agent and list that property with them.
As the prospective buyer, once you get further into the buying process, an estate agent will also walk through and discuss the various contracts, concerns, potential opportunities, and all of those important numbers, so that you can make a well-informed decision to proceed.
What is a property deal sourcing agent?
A property sourcer acts on behalf of the buyer to meet their property requirements. This could involve researching publicly available properties for sale from the very beginning of the process, to leveraging their network of private sellers, developers, and even local real estate agents.
They might have a portfolio of available properties they can sell, however, their primary focus won't necessarily be to shift those properties if they don't fit their client's needs. This is because you as the buyer will typically pay them a sourcing fee upon completion of a property purchase. Therefore, the sourcer's time, effort and expertise are rewarded at the point of sale, regardless of the properties they find, analyze and present to you.
Generally speaking, a property sourcing agent does a lot of "connecting the dots" between all parties involved in the purchase. For any property-related activity that a buyer would typically be faced with, a sourcing agent can step in, own, and move things forward in the most efficient way possible.
Real estate agent versus property deal sourcing agent
When approaching any type of property expert who offers to help you buy a property, it's very useful to know how to differentiate who you're working with (i.e. an estate agent or a property sourcer). Understanding the differences will allow you to pinpoint what's their motivations and the extent of what they can (and will) do to help you.
The seller is the real client for an estate agent
If you buy a home using a conventional estate agent's services, they almost always take a percentage of the sale price as commission. Therefore, the seller is their client of focus. As the buyer, you're also a client but ultimately the estate agent wants to sell the property that their client (on the selling side) has tasked them with.
The estate agent is in charge of advertising and marketing the home that's for sale on their books. Meanwhile, a property sourcer might contact that estate agent to negotiate a deal on one of those properties for sale, since it could fit their own client's requirements perfectly – i.e. you, the buyer.
Property sourcers work with estate agents and estate agents work with property sourcers
It's a small world in the UK property game, and often a sourcing agent with a thorough understanding of the local market will know most, if not all, of the nearby estate agents and vice versa. At times, depending on the situation both parties are faced with, they'll benefit from working closely together, and each of their clients' (i.e. the buyers and sellers) will benefit too.
For example, if a property sourcer's client (i.e. a buyer) wants a 1-bed flat and there's a limited supply available, then the sourcer could reach out to several local estate agencies to see if they might have something of interest. On the other hand, if an estate agent's client (i.e. a seller) wants a quick through a cash buyer, then the estate agent could contact a sourcer to see if they might have a buyer who is ready to move fast.
Property sourcers think and operate with a buyer mindset
The best way to picture a property sourcing expert is to think of them as someone who is in "your" shoes during the property acquisition process, often from start to finish. Let's say you provide your sourcing agent with these key criteria for the property you want:
- A buy-to-let 3-bed house close to a city
- < £300k, at least 5% below market value
- Minimum of 6% rental yield
- Minimum of 21% ROI when taking into account capital appreciation
- Opportunity for successful planning permission to extend the building and create an additional bedroom
Although this criterion is very specific, it's great for the sourcer because they can begin the search and operate with your mindset. It's almost like they become the buyer, but they're simply providing you with a service that helps you tick all of the boxes if you were buying directly on your own.
When to use a property deal sourcing agent
In the past few years, UK property deal sourcing has grown hugely in popularity. This is from the perspective of an increase in both supply and demand.
More individual property experts and companies are now specializing in sourcing activities, while many buyers and investors who are cash-rich yet time-poor are seeking tailored help to source them the best property deals.
Arguably, you could say that you should work with a property sourcer at any point when you want to buy a property... You'll very likely save a great amount of time and money if the sourcing agent does a good job.
Nevertheless, it's vital to work with a compliant property sourcer who can speak to (and show) some of their previous work, in addition to sharing genuine feedback from their previous/current clients.
