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This week, I got a great question from a new deal sourcer. I think there may well be a number of you in the same position as her, so I thought it would be a good idea to highlight her question and my answer here on the blog.
Emma Lundy said…
I am a new deal sourcer and have been told by an investor they want off-market deals and deals that haven't been seen by anyone else. What is the best way to go about it, as I got the stage where I was revealing the deal to them and got told that they didn't want it as it's on market ,and they didn't want to deal with agents and wanted to go directly to the seller. What is the best way to find these sellers and resolve this problem, as I spent lots of time doing my due diligence and researching the deal?
All right Emma, first thing I'm going to say is there's a chance, a small chance that these deals that you keep telling these investors about (and they go now ‘I'm not interested because it's on market or whatever’) that they're just going and buying them anyway. They could be cutting you out of the deal. I don't know how many times this has happened, but it's very possible that you've been losing thousands and thousands of pounds as a result of this.
So the first thing I'll say is if you're gonna ever, ever pass a deal onto somebody before you give them the information, you need to make sure that they sign a non-disclosure agreement or pay you a fee (even if there's a calling off period).
If your investor's saying that he's looking for off-market deals only, then I would probably get a bespoke finder's fee from him. Say, ‘Look, you tell me exactly what you want and then I will take a £1,000 refundable fee from you. If I manage to find what you're looking for within the next two months, then you can pay me the difference, maybe an extra two grand, and then you’ve got the deal. If I can't find it, I'll give you the one thousand pounds back.’
Do not spend hundreds of hours looking for a deal for somebody when that person could just be a complete time waster. So find out what they're looking for and take a bespoke sourcing fee off them. Then go to town and find what they want. I don't know if this is helpful. However, I'm speaking from experience, I've sold hundreds of deals and I've dealt with thousands of investors.
If you want some more information about deal sourcing, please take a moment to check out my article Deal Sourcing 101 | How To Make £3,000 Per Month Doing This! It’s worth a read for anyone getting started in the deal sourcing business.