Expat Property Story

PropSourcer: A Platform for Connecting UK Property Investors and Sourcers

• The Expat Property Guy • Season 3 • Episode 87

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As an expat / remote investor investing in UK property, one of your biggest challenges is finding a UK property sourcer you can trust.


This week’s guest is Dean Pike, a Hong Kong based expat, who found this out to his cost after finding himself fleeced by a sourcer on Facebook.


Determined that this should not happen to others, he set up PropSourcer, a platform for connecting UK property investors with verified UK property sourcing companies. 


Dean has some great advice for property investors such as checking that any sourcer you’re thinking of working with is a member of one of the redress schemes such as The Property Redress Scheme (PRS) or The Property Ombudsman, (TPO).

 

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compliant sourcing agent, Information Commissioner's Office, professional indemnity insurance, social media profiles, website, Redress schemes, legitimate legal entity, necessary agreements, credibility, deal sourcer, private networks, local knowledge, UK property investors, verified UK property sources, property sourcer, Facebook groups, new build one bed apartment, NDA, reservation fee, business idea, true legal entity, contracts, option agreements, fee agreements, HMRC AML supervision, ethical business people, Propsourcer, UK government regulations, ICO registration number, redress schemes, professional indemnity insurance policy number, anti Money Laundering Supervision Guidance, cowboys, trust, due diligence, advertising properties, budget, type, unscrupulous ones.

I would have been a lot more diligent about checking whether or not they're a member of a redress scheme, whether or not they have professional indemnity insurance. Are they registered with the Information Commissioner's office? Are they a true legal entity? Have they registered a UK company? Are they using legitimate contracts? Do they have option agreements? Fee agreements? Do they have real NDA checking? Things like their social media profiles, the content they're posting, their website? If you compile all that stuff together, you can get a pretty good view as to whether or not someone is property sourcing agent. You're listening to Expat Property Story, a podcast in which I share my story to smooth the way for you to have your own expat property story. Hello there. That was Dean, also known as Prop Saucer, whose unhappy experience with a UK property sourcer led him to set up a platform for connecting UK property investors with verified UK property sources. And we'll be hearing from Dean later in the show, but we're starting episode 87 with a listener review as we're currently on a campaign to collect more reviews which helps us grow our community of expat property investors. And this one is from Hong Kong, which is handy because it provides a neat link into a reminder that if you're based in the eight five two, which is another name for Hong Kong, then why not join us? At the Urban Bakery in the Landmark Building in Central this Saturday, May 6, for the first of our monthly meetups, which will take place on the first Saturday of each month. And if you'd like me to announce a monthly meetup wherever you're based in the world, I'm more than happy to do so. Just let me know by leaving a message on the podcast website, www.expatpropertystory.com. Anyway, back to our review, which was left by Tony Young. This is certainly a five star podcast. I really enjoy listening to the episodes and learning from the guest speakers. I can certainly feel my property knowledge grow a lot. As a Hong Konger, I also have the benefit of the host wearing my shoes and asking the questions that I always wanted to ask. It really echoes with me. I particularly like the lessons I have learned, the challenges and mistakes that the host has experienced which give me valuable guidance. Thank you for sharing. Thank you, Tony, for your kind words. And if you'd like to leave an honest review, then you can do so either on Apple podcasts or Spotify or whichever platform you choose to use, or at the podcast website, which is, once again, www.expatpropertystory.com. And finally, before we hear all about propsourcer from Dean, if you haven't already subscribed to our mailing list, then be sure to sign up as soon as possible to access our monthly newsletter, which will be winging its way into your inbox in the next week. There's lots of links to all the latest property news and data. And there's some particularly useful information regarding national insurance contributions, which you'll need to keep on top of to ensure you qualify for the full state pension. So that's another incentive to subscribe to our newsletter. Now, what song springs to mind when you think about your property story? Well, in Dean's case, it's less of a song and more of a theme tune. There's a Thailand property disc. This is going to disappoint people, because I still watch a lot of Homes Under The Hammer, so the intro theme to that show I'm a big fan of Deon Dublin, having been a big football fan when I was a kid, so I remember him playing for Manchester United and Aston Villa. So that show is pretty good and I think he's done pretty well out of that as well. What do you like about that show? I tend to like the idea of the auction environment because it's very sort of spontaneous in the sense that you don't really know what's going to happen. There's a lot of people trying to buy the same thing at the same time, which is nontraditional to a typical property buying process, where it can take months. I really like it because you don't really know what's going to happen. And especially when they go into the refurb stages where you kind of see something that they buy initially that might look like a complete dump or a disaster, and then a few months later, they'll come back and they've turned it around and added on another 10% value or increase the rental yield. So I think that's pretty good. There's some good stories on there to. Trace the origin of prop saucer. Let me take you back to 2021 in the middle of the Global Pandemic, when Dean, who has lived in Hong Kong for nearly ten years, was looking to buy his first UK property. It was middle of 2021, so when COVID was still rampant and I was looking to buy property myself at that time without approaching a traditional estate agency. So I was complete novice at the time with property. Still am, to be honest. But I wanted to see if there were other paths to buy a good deal, but then also to educate myself a lot more in the industry as a whole. So what I ended up doing was I found a few Facebook groups focusing on UK property deals and they were all really busy with daily activities. There were people posting their deals and then others commenting, asking for more information through DMs, so on and so forth, and I thought, this is pretty interesting. So there's a lot of deals here and these are real investors replying, or seemingly real investors replying, that appear to be pretty engaged, ready to take action. So at the time, I didn't know what a sourcing agent or a deal sourcer was, so I'm using those terms interchangeably. But it turns out that the people posting those deals were in fact the sourcing agents. So decided to join in on the action. And I found an interesting deal posted by someone for a new build, one bed apartment. Got the full details with the brochure, how all of the numbers stacked up from an investment perspective, signed an NDA, transferred what I was told was a reservation fee, and then after that never heard anything again. So that person that I was liaising with at the time, he disappeared. And I asked several of the active and more prominent members in the Facebook group where the deal was posted if this was someone they knew, is it common, how did this happen? So on, and I didn't get anywhere in terms of getting my money back, but it did highlight a problem and validated a potential business idea. I wasn't the only person this had happened to. It's pretty easy to basically fake it and casually pose as a so called professional in the space and that was where it kind of ended. So I didn't take it any further from that as far as trying again at that point. How much was it that you paid? It was 1900 pounds for a reservation fee. And knowing what I know now, I don't even know if there is such thing as a reservation fee when it comes to property sourcing. There are fees up front and there's fees in terms of commission when you buy something. But I think I was sort of taken to the races or maybe it was just terminology I wasn't familiar with at the time. I haven't really used sourcing agents myself, but I know that there's one that someone I know is using and they've taken a reservation fee because in their words, they want to make sure that they're not dealing with a time waster. So I can see it from both sides. I can see the idea that otherwise you're going to get inundated with people who are just going to waste your time. But if you actually put some money up front, then you're showing that you're serious. But the flip side of that, of course, is that you're tied into that person and you won't get your money back unless you take one of their deals. There's definitely many of the more in demand sourcing agents that take fees upfront. But from my experience and from what I've heard from other agents, taking that fee is almost like a service fee for them to then go and find the deals for you. Versus the situation I had was there was a deal that I found that he'd already posted. He'd found that deal, he packaged it, he shared the numbers, so I was ready to immediately take action. So a reservation fee in terms of reserving something I was already sort of committing to buy through, signing different documents seemed a little bit obscure at the time because I'm not paying that agent for that service to go out and find a property. That's typically what they would charge for, from what I've seen and heard. So where did that deal come from? Was it an off market deal? Was it found through right move? How did that? Well, I call him a sourcing agent, but he's just a con artist, really. What did he say? It still happens today. The format is typically if you're familiar with a Facebook news feed or a group setting, you'll see the profile picture, the person's name, and then they'll post something. They can throw in emojis and bullet points and so on. So it was almost just formatted like a little snippet advertising a typical property with eight or nine photos, I think, attached to the post at the bottom and that was it. So I wasn't necessarily looking for anything specifically. I was quite open minded. I knew what my budget was, I knew roughly the type of property I was looking for, but as far as finding something specific, I was all open, really, to seeing what was being posted. And they all look very common. I mean, there's good sourcing agents that use these groups. I know of them, and they post deals in a similar way. But then there's obviously some cowboys which you have to be a bit more mindful of, and then that sort of opens the doors to making sure that you're performing your own due diligence on anyone that you're working with in that space. And obviously that's something that I didn't do at the time. The contributors on these Facebook groups, are they upfront about the fact that they're deal sourcing? Yeah, 100%. So some of them will mention a company name. Some of them, at the end of a post, will state their registration details with the various requirements, all unofficial because there aren't any truly official UK government regulations around Sourcing, but they are loosely related to estate agents, so they'll post their ICO registration number. So. Information Commissioner's office. Data Protection Act registration number. They'll share their membership code for one of the redress schemes that they're a member of. So that whether that be the Property Redress Scheme, the PRS or the Property Ombudsman, the TPO, and then they might throw in some other bits and pieces, like an insurance policy number for professional indemnity insurance, and some of them go all out and they'll post everything. There might be a number for their registration on the HMRC, anti Money Laundering Supervision Guidance, which is a whole other thing, but they will go out of their way to usually share everything, but I didn't learn that until later. So what could you have done to. Have avoided the situation that you found yourself in with that con artist sourcing agent? I would have looked through and been a lot more diligent about checking whether or not they're a member of a redress scheme, whether or not they have professional indemnity insurance, are they registered with the Information Commissioner's Office. Are they a true legal entity in the sense of have they registered a UK company, are they using legitimate contracts? Do they have option agreements, fee agreements? Do they have a real NDA? I think if you compile all that stuff together, you can get a pretty good view as to whether or not someone is property sourcing agent. There's a few other bits and pieces that help build trust, such as checking things like their social media profiles, the content they're posting, their website. They're like more unofficial ways to validate there. But I think ultimately performing all of those checks, one I forgot to mention, sorry, was the HMRC AML supervision. Definitely check that as well. A lot of this stuff is public information, so you can go on to official websites and look up company names, individuals, and find whether or not they're registered and whether or not their registration is valid. That would be at least the starting point. To establish a baseline level of trust doesn't necessarily mean that they're ethical business people. You or I could set up a compliant sourcing business in a couple of weeks, spend 1500 quid, do all of the registrations and then be a property sourcing agent, or even an estate agent, if you will. But obviously it's about establishing that initial level so that you've got a fundamental level of trust to give you more confidence to then take it a bit further. After Dean's unfortunate experience at the hands of this dodgy con artist led him to set up Prop Sourcer, a platform for connecting property investors with verified UK sourcing companies. So in its simplest form, Propsourcer is an online directory that aims to list trusted UK property sourcing agents so they can be found easily by investors, so the agents have greater credibility and brand exposure. And as a result, they'll get more investor leads and then clients to eventually and hopefully source more properties to get more deals for themselves. And then on the other hand, the investors, they can use Prop Source it to search for agents that meet their criteria. So this allows the investor, as I just alluded to previously, they can act with more confidence, knowing that they're in better hands to get help finding good property deals that are otherwise difficult to come by because they are more trusted. And they've been vetted by us to a certain extent before they can even appear on the platform. There's a lot more to it than that, but essentially we're the trust, a trader or checker trade of property sourcing. So most UK listeners, I think, can probably get the idea immediately just from that. So let me just go back to what you said. You said you or I could just set up and be compliant as deal sourcing agents. How can you ensure that your agents are not what you just alluded to? They're not rogue traders. There's only so much we can do trying to remove all of the cowboys, even if they are fully registered, fully compliant per se, according to what we've just discussed, only goes so far. It's no different than if you were working with any type of professional they could be set up fully compliant. Running fully established business such as a lawyer or even a doctor to a certain extent doesn't necessarily mean that they are not doing dodgy things. So prop sourcer itself we are all about trying to further that trust so it's not just about establishing that compliance status and then showcasing those agents. It's very public in terms of the information you can see on there. So every sourcing agent has their own profile, there's links to their social media profiles, their websites, their logos, they can have recommendations posted by their clients which they can reply to. We have a verification process to make sure that those recommendations are genuine so it's not just like a typical Google review and they can post their deals and I guess all of these things together it's about building that trust. So we try and take it as far as possible so that we are removing the cowboys and almost performing some level of due diligence for any investor leads coming in so that they can ultimately act with less fear. Props also currently has a variety of agents on the platform so it's a. Mix of individual agents whether they're running their own companies or agents working for larger companies and then there's a couple of situations I think depending on the membership plan they've signed up for. Some companies have several agents that are represented in their own individual profiles. So in your opinion, what makes a good deal sourcer? So a good deal sourcer for me is someone that is fully motivated to act on behalf of the buyer. So in this case it would be typically their investor client, unlike a traditional estate agent who would more often than not be motivated by the seller because that's where their commission comes from. When a property sells, the seller pays commission to the estate agent with a deal sourcer they should be going out of their way above and beyond to help an investor by saving them the time and money in terms of getting deals in place that are just extremely difficult to find and to come by. So not typically going through your right moves or your zoop for listings because that's obviously very easy or easier to find I should say. And rather it's more about using their private networks, their contacts, their relationships with estate agents, perhaps to a certain extent and using that local knowledge and expertise to be able to package deals that are very attractive. And they do genuinely represent something that is very difficult for an investor, someone that's buying the property to turn down of the deal. Sources that you work with are they finding deals and then trying to sell those deals? I mean, can you do it the other way around where, say, for example, I want to buy, just for argument's sake, an HMO in leads? Can I find someone who's going to go and source that for me? Yeah, that's the idea. So the way it works, from an investor's point of view, it's a two sided marketplace, so you have the sourcing agents on one side and then the investors on the other. Now, from an investor's viewpoint, they can start, let's say, from the homepage, they can look up sourcing agents based on their designated property and location specialties. At the basic level, you can go into more search criteria, but that's the starting point. So, for example, as you said, you're looking for someone that has expertise with HMOs in West Yorkshire or Leeds, and they can search for agents that meet that criteria and they'll see a list of agents or company profiles that match the criteria. So from there, it's just about digging in as needed, so they can go in and perform more due diligence by looking through the profiles and seeing the links and the recommendations and so on. So if someone's listening to this, thinking, well, I'm looking for a source, how does it work? Do they pay you? Is it just the agent that pays you? Yes. So from an investor's perspective, if they're looking to work with a sourcing agent, they can go to propsourcer.com, go straight into the search results to see what sourcing agents there are on the platform based on the property and location requirements they have, such as a buy to let in Manchester, they're looking for agents that specifically match that criteria. They'll see a bunch of results, they can go onto the profiles and then contact agents immediately. They don't need to register, they don't need to pay anything. It's completely public from the investors point of view. And that might change in the future, but for now, we're keeping it like that so that we can make sure we're not putting any obstacles in place to push investors away in case they come and then want to wander off if they need an account. So what have you done to vet the sourcing agent? If an expat is listening and thinking, I'd quite like to use one of these sourcing agents, but how do I know if I'm getting a good one? What have you done to vet them? Yeah. So, using a mix of official government rules and guidance for estate agencies, amongst some other bits and pieces. So, initially, I ended up drafting my own criteria of what constitutes a so called compliant sourcing agent, and then this later became our verification criteria that we still regularly review and that all agents have to pass when registering with us. So, just to highlight, what I'm about to say is it's completely unofficial, it's definitely not legal advice. So it's simply our way of declaring who's compliant or can be trusted or not, but it's our own criteria that we made up ourselves. It's something and we feel it gives us a good indication of the level of professionalism. So, to be specific, the six checks currently that we run with each sourcing agent that applies to register is we check if they're employed by a UK registered company, could be as director of their own company or as an employee of someone else's company. We make sure that they're a member of one of the UK government approved redress schemes. So whether that's the Property Ombudsman or the Property Redress scheme, so that ensures that if any investor or any of their customers has a complaint about their service and they can't resolve it between themselves, then they can raise a formal complaint to the relevant scheme. Third one we check is ensuring they're registered with the Information Commissioner's Office, the ICO, that's as part of the Data Protection Act, and this relates to how they manage and how they process personal data. So by UK law, any property agent or company that's handling personal data should hold an active registration. The fourth one on the list is checking if they're registered with HMRC for Anti Money Laundering Supervision or AML Supervision. So any property sources, business activity, so almost certainly they would fall under the Estate Agents Act 1979. So ultimately there's a requirement there for them to be registered for AML supervision. Insurance is the fifth one. We make sure that they're in possession of professional indemnity insurance. This helps obviously protect them from financial loss in any unlikely event that anyone they work with files a claim against them for things like negligence or misinformation, so on and so forth. Other insurance is sometimes useful, but it really depends on their situation and what other duties they're doing, how many employees they have, and so on. But we're not checking anything beyond professional indemnity insurance. And the last thing on the list is, are they using contracts or agreements with the parties they're dealing with? So typically, to engage in any sort of sourcing activities correctly, the sourcing agent should be using their own contracts or agreements for property buyers, sellers, landlord owners and so on. So for example, they might have fee agreements, option agreements, nondisclosure agreements, NDAs, and anything else that really matches the need for them to have a contract with any party when doing business. And that's really all we check sort of formally upon each registration. We do take it a little bit further in case of any doubt, so we'll go back with questions if we need. And we'll also check things like social media profiles, social media activity, their website, and so on. We all know that there are the odd unscrupulous person operating in property who perhaps sell deal sourcing courses and sign up naive people who come out with a certificate at the end of it saying I'm a property deal sourcer. How do you ensure that you're not getting those kinds of people on your platform. Amongst all of the checks we'll do with the verification process, we have every single personal company that applies to get registered. We also have a direct conversation with them, whether that be a 15 minutes phone call, a 30 minutes phone call, or even the long email conversation just to help further assess their credibility. Now, that's not to be disrespectful to, let's say, some of the folks that are going on to these courses and becoming property experts, because some of those people might be good people and they might have good intentions, but we want to make sure that Prop sourcer represents the best sourcing agents, the so called good guys. So we're trying to make sure that they're the people that get a spot on the directory and not necessarily someone that comes off one of these courses after three days and has no experience working as a sourcing agent before. My three things to pick out from today's show are one, if you're looking at working with a sourcing agent, you'll want to make sure they're a member of one of the Redress schemes and whether or not they have professional indemnity insurance and whether they're registered with the Information Commissioner's office. Are they a true legal entity in the sense of have they registered a UK company and are they using legitimate contracts, do they have option agreements, fee agreements and all the other things Dean highlighted? Two. I really like the fact that Dean has gone as far as reasonably possible to vet the sourcing companies he promotes on his platform. Not just by verifying that they've passed all the compliance tests just mentioned, but also by taking the time to personally speak to all the sources who apply to register for his service to assess their credibility. Finally, and this is something that I always do when checking out people to work with or even just invite onto the podcast as a guest is to Google their name along with a word like criticism or bad review and see what comes up. And I'll also do a quick search on property tribes to see what's been said about them. Now, it's occurred to me that we. Haven'T acknowledged our friends from Australia in. The exotic listener location part of the. Show, despite the fact that we have a fair few listeners from that part of the world. Many of them are based in Sydney, New South Wales. So if you're one of them, don't be shy. Get in touch and perhaps tell us what's the one part of your expat property story that you're struggling with at the moment. Get in touch and let us know and maybe we'll be able to seek out an expert and provide some more free content around whatever that struggle might be. In the meantime, share the show to spread the word. You've been listening to expat property story.