BUYING AGENTS & PROPERTY FINDERS ADVICE FROM LETTINGFOCUS.COM

BUYING AGENTS & PROPERTY FINDERS - ADVICE FROM LETTINGFOCUS.COM

LettingFocus.com expert Lawrenson explains how buying agents & property finders can help property buyers. Ask us for more advice

Property expert David Lawrenson of www.lettingfocus.com says, "As we lead ever busier lives we seem to have less time to spend looking at properties."

Lack of time curses us all - even portfolio landlords - who from time to time find themselves tied up in the general hassle and day to day management that a large property investment portfolio brings.

Of course, today we have the internet which allows us to easily browse properties for sale or rental and get a feel of what’s on offer - all from the comfort of our own home.

The net undoubtedly saves a lot of the “foot slog” - but finding and buying the right types of property still takes time.

And so there are now lots of companies who offer to search the market and find suitable properties for us in return for a fee. And in many cases they will also refurbish the properties, find tenants and manage them too.

But how do we know if these “buying agents” are any good? Let’s have a closer look.

Firstly, it seems obvious but is worth saying at the outset - that buying agents, in whatever form they take, act for the purchaser.

This is a key difference to the estate agent or auctioneer who acts for the seller - or at least that’s what they should be doing. (I say “should be doing” because there are a small minority of agents who all too easily will give a lot of useful information away to the buyer, especially about the sellers’ circumstances)

Buying agents and property search companies are a recent phenomenon

Buying agents did not really appear in the UK until the mid 1980s and even then they were confined to finding properties for mainly very well off clients who did not want the hassle (or in the case of celebrities the unwanted publicity) of having to look themselves.

Usually they were small operations but in the 1990s the ranks of some of the larger (and generally more up market agencies) joined in too – again mostly to find properties for the wealthy for their own occupation rather than as an investment proposition.

However, by the mid and late 1990s buying agents were doing more and more work for investment buyers and for some well off tenants too.

For the investment buyer the buying agent typically offers a comprehensive package services including not just finding the property but also refurbishing it, furnishing, letting, management and arranging finance too.

Buying Agents - What You Should Know

Firstly you should know that the house search market is unregulated.

We have already seen the collapse of one major property investment company which specialised in buying properties in depressed parts of the north of England with the intention of letting them to social housing tenants.

Many of their investors were from the south east who had bought “sight unseen” after seeing the company’s ads in the quality papers and who had not even bothered to do any research on the area that they are buying.

So one of the key rules is to ask questions about the area you are buying in.

Go and see the areas for yourself and give the buying agent a tight brief -this road, not that road, this postal area, not that one.

Unless you are rich enough to risk losing a lot of money, you must get involved a bit – you cannot afford to be too “hands off”.

Ask what aspects of the buying agents’ activities they outsource because if they subcontract say the letting and management they (and ultimately you) will have less control.

Usually you are better off using a specialist agent to find tenants and maybe another one to manage tenants. This is because there are different skills involved in finding a property to those involved in finding properties and furnishing them. Even more very different skills again are required for letting and management.

Be wary of buying agents that are part of estate agency arms as there is the obvious temptation for the buying agent to recommend a property that the estate agency side is trying to sell.

Buying agents should use their skill to buy at a good (i.e. below market) price and you may want to structure the deal you have with them to incentivise this.

Ask about their degree of local knowledge in terms of capital values and rental income and get at least three references. If they are unwilling to give them, then go to someone else.

How property search companies charge

Charging structures vary a great deal. Some will work on a free initial service with fees only payable on exchange of contracts or completion. Others will charge a basic retainer or registration fee – typically this will about £1,500 in London, though this can be much higher or lower depending on how up or down market you are going.

The fees will typically be 1.5% to 2% plus VAT of the purchase price. Some companies will deduct the retainer fee from this, some will not. Then there are other fees which depend on what you want doing and whether the property requires it.

For example, there may be a project management fee of say 10 to 12.5% plus VAT to manage refurbishment and furnishing.

In addition, watch out for whether they will try to charge you for setting up the mortgage finance.

Some companies will do the whole thing for you – finding to letting – and will roll up the whole fee you pay to cover all the work.

Of course, how much they do for you (and how much you are going to have to pay) will depend on how passive or active you want to be.

About David Lawrenson and Lettingfocus.com

If you need more advice on buying agents or property finders please ask me. I’m David Lawrenson from property investment mentors Lettingfocus.com.

I’m the author of the buy to let book “Successful Property Letting - How to Make Money in Buy to Let” - the UK’s top selling property title. It is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on buying below market value.

What’s unique about lettingfocus.com is that we offer independent property coaching because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, estate agent or bridging loan financier and do not receive commissions from any of these sources either.

We offer advice both at our seminars and also on a one to one basis. Contact us to find out more.

Lawrenson and Lettingfocus.com – Freelance Writer, Speaker and Consultant

As an independent expert on the UK property market and a well known property investment blogger, I am asked to contribute regularly to newspapers and a host of property websites as a freelance writer.

My work as a consultant also stretches to helping companies such as banks, building societies, housing associations and web portals with their buy to let and property products and services.

You can read more of my property investment blog and read details of my networking, advice and buy to let networking programme at my website or Contact us to find out more.

My next London property investors networking meeting is coming soon.