By Tina Walsh – Founder & CEO of the National Association of Professional Sourcing Agents
(NAPSA) Ltd
The property sourcing and deal packaging sector has grown significantly in recent years, offering investors increased access to opportunities across different markets and strategies.
However, alongside this growth, a number of recurring issues have emerged, particularly around how investors engage with sourcing agents and deal packagers, and how fees, compliance, and expectations are managed.
This article outlines some of the most common and costly mistakes investors make, and highlights key considerations when entering into these types of arrangements.
- Prioritising the deal over compliance
One of the most common mistakes is focusing solely on whether a deal “stacks,” while overlooking whether the agent is operating compliantly.
While projected returns and headline figures may appear attractive, they should not come at the expense of proper due diligence. Compliance is not simply a formality; it is a key part of protecting both the investor and the transaction.
In many cases, issues only become apparent after funds have been committed, at which point options for recourse can be limited.
- Assuming agents have the necessary experience
Not all sourcing agents or deal packagers have practical investment experience.
A significant number enter the sector without having purchased or invested in property themselves. This can affect their ability to accurately assess deals, understand risks, and present realistic projections.
Investors should take the time to understand an agent’s background, track record, and level of experience before entering into any agreement.
- Paying large upfront fees without safeguards
Investors are frequently asked to pay significant sums upfront, sometimes before receiving full details of a deal.
These fees may be described as commitment fees, reservation fees, or full sourcing fees. While not uncommon, the structure and protection of these payments are critical.
In many cases, these funds are not held in protected accounts. If a deal falls through or does not meet expectations, recovering the money can be difficult and, in some instances, more costly than the original fee itself.
Understanding how funds are handled, and whether any protections are in place, is essential before making payment.
- Taking “refundable” at face value
Fees are often described as refundable, deductible, or transferable, but this is not always straightforward in practice.
For a fee to be genuinely refundable, it should typically be held in a client account or an escrow-type arrangement. These structures are not always in place, and the terms attached to refunds may be restrictive.
Where fees are described as deductible or transferable, investors should consider what happens if no suitable deal is ultimately completed, and whether those funds remain accessible.
Clarity at the outset can prevent misunderstandings later on.
- Paying for access rather than a secured opportunity
This is more commonly associated with certain deal packaging models.
Properties may be marketed with limited information, often via social media or mailing lists, encouraging investors to request further details.
At that stage, a substantial upfront fee may be required, sometimes ranging from £3,000 to £10,000, often on a non-refundable basis.
In many cases, the property is not secured. The fee may effectively provide access to the estate agent’s details rather than a guaranteed opportunity.
If the deal proves unsuitable, the figures are inaccurate, or the property is no longer available, there is typically no refund, leaving the investor exposed.
Across the sector, these issues have resulted in investors losing significant sums of hard-earned capital.
In hindsight, the importance of compliance, transparency, and proper due diligence becomes clear. Taking time to assess how an agent operates, how fees are structured, and what protections are in place can significantly reduce risk.
Working with professionals who follow recognised standards and operate within clear compliance frameworks is an important step in protecting both capital and long-term investment outcomes.
