What fees are involved?
Learn what a sourcing fee is and how much they are
All fees must be transparent and clearly visible with nothing hidden. The consumer should be made aware of all fees (including VAT) before consenting and signing any contract.
This fee is usually for the agent’s work to research, negotiate and complete the deal with the investor (in line with the investor’s requirements).
The agent negotiates on the investor’s behalf and then completes the transaction for a fee.
Holding depositThis is payable at the start, to take the property that the investor wishes to buy, off the market.
This is often deducted from the completion fee that the sourcer charges if the investor continues with the purchase of the property.
Terms and conditions should be fully understood. Completion feeThis will be charged when the investor continues with the purchase of the property and is usually a percentage of the purchase price.
Other feesSome sourcers will also charge for things like viewings, renovation project management and other activities.
The fee is sometimes referred to as a ‘reservation fee’.
Yes. A deposit is the sourcing company’s way of guaranteeing some certainty that the buyer is going to go ahead with the project.
This not only protects themselves but allows them to pass that certainty on to the seller, with some confidence.
It is important to understand how the deposit will be treated, and what conditions will apply if you pull out relating to any refund, or if the seller pulls out. A deposit is typically around £500 and may be up to £1500.
This will depend on the property deal requirements. For example:
• If looking to buy a property off-plan, a deposit is payable when the offer is made and the sales process starts • Where a property is being refurbished, the deposit may only be payable at the point of exchange as opposed to when the buyer puts their offer in• Taking the property off the market may require the buyer to pay the deposit so that due diligence, which takes time, can be carried out
Yes, if a buyer pulls out of the contract for no good reason and: • the agent has delivered the contracted service and • the terms proposed were reasonable and the amount being retained by the agent minimises the loss to the buyer but covers all reasonable costs • there are no circumstances that make the deal unfair, under consumer law Yes, if the original deal does not materialise and:• the buyer is presented with an alternative deal, in a reasonable time, and it meets the original requirements which the original fee covers
Our general approach is that a fee should only be retained if the deal is completed.
However, where some costs have been incurred it may only be reasonable to withhold part of the fee when a deal could not be completed, depending on the circumstances.
All cases are investigated on an individual basis and decisions will depend on the evidence provided.
