Myth 1
Sourcing agents don’t need registrations or insurance because they’re not estate agents.
Fact: Sourcing agents are part of property transactions, whether they handle money directly or not. They’re brokering deals, much like estate agents, just with reversed roles.
While estate agents represent the seller, sourcing agents often represent the buyer. This means compliance, registrations, and insurance are essential to operate legally and professionally under anti-money laundering (AML) regulations.
Myth 2
You can co-source using another agent’s compliance until you can afford your own.
Fact: Incorrect. Would you trust a solicitor without protections or insurance? Or would you use an estate agent if they were 'borrowing' their counterpart's registrations from across the road?
Compliance registrations are specific to a business and cannot be shared. Co-sourcing without your own compliance puts you and your clients at significant risk and could lead to legal consequences.
Myth 3
You can source properties anywhere in the UK, even if you’ve never visited the area.
Fact: While not illegal, this is highly inadvisable. How can you truly understand what works for your investor without knowing the area?
A “deal” found online might look good on paper, but without local knowledge, you’re gambling with your client’s investment.
Local agents specialise in specific areas because they’ve lived there, studied there, or spent significant time understanding the nuances of each street, development, and community. This is a key principle of professional property deal sourcing.
Myth 4
You can source any strategy without specialising.
Fact: While it’s not illegal to source multiple strategies, it’s far better to focus on a few. Each strategy comes with its own legislation, regulations, and material information requirements.
Can you confidently present deals to investors if you don’t fully understand the intricacies of each strategy? Specialisation builds trust and credibility in deal packaging and property sourcing.
Not to mention, some strategies may not work in particular areas - whilst others might flourish.
Myth 5
You can get compliant in less than a day.
Fact: Compliance isn’t a tick-box exercise. It’s the foundation of your business. It governs how you operate, your fees, cancellation terms, and services.
Unless you already have a background in property management, law, or finance, achieving full compliance takes time, effort, and education.
Organisations like NAPSA (National Association of Professional Sourcing Agents) can help guide you through the process through different programmes and membership.
Myth 6
An NDA is enough to secure an investor.
Fact: NDAs are designed for confidentiality, not for securing business relationships.
What you need is a robust terms of business contract that clearly outlines the scope of your services, fees, and responsibilities.
This protects both you and your investor and is a key part of sourcing compliance.
Take a look at all of the documents and contracts you are legally required to have in place right here.
Myth 7
You can hold up front refundable client fees in your own account.
Fact: Absolutely not. Any client money which is refundable must be held in a dedicated client account that is separate from your business or personal accounts.
This ensures transparency and protects your clients’ funds. Failing to do this could result in serious legal and financial consequences under property sourcing AML regulations.
Myth 8
You can take a large fee upfront.
Fact: While it’s not illegal to take large upfront fees, this practice is heavily frowned upon by both government approved redress schemes (The Property Ombudsman and Property Redress)
If an investor complains, the redress scheme could rule against you and require you to refund the fee. It’s better to structure your fees in a way that aligns with industry best practices and builds trust with your clients.
You can find out more about reasonable fee structures here.
Myth 9
You don’t need to register with HMRC for Anti-Money Laundering (AML).
Fact: If you’re involved in property transactions, you must register with HMRC for AML supervision.
This is a legal requirement to ensure you’re not facilitating money laundering, terrorist financing, proliferation financing, fraud or tax evasion. Skipping this step can result in hefty fines and legal consequences. AML compliance is a cornerstone of professional property deal sourcing.
Myth 10
You can use a random SIC code for sourcing.
Fact: The only SIC code you can use when registering your business on Companies House for property sourcing is 68310 – Real Estate Agencies.
Using an incorrect SIC code could lead to compliance issues and penalties. This code ensures your business is correctly classified as part of the property transaction sector.
Myth 11
Different terminologies mean I don’t need to set up compliance.
Fact: Whether you state that you operate as a sourcing agent, property deal sourcer, deal packager, property finder, buying agent, or property acquisitions specialist—it doesn’t matter.
If you carry out what is stated as being 'estate agency work' then you must meet minimum compliance standards
Terminology doesn’t exempt you from legal obligations.
Myth 12
You don’t need a client onboarding process.
Fact: A professional onboarding process is essential for building trust and ensuring compliance. Having this in place should mean that all prospective clients receive the same level of professional service.
This includes verifying your client’s identity, understanding their investment goals, and setting clear expectations.
Skipping this step can lead to misunderstandings, disputes, or even legal issues.
Myth 13
You can rely on verbal agreements with investors.
Fact: Verbal agreements are a recipe for disaster. Always have a written contract in place to protect both parties.
This ensures clarity on terms, fees, and responsibilities, and provides a legal safety net if disputes arise.
Myth 14
Property sourcing is easy money.
Fact: Property sourcing is a business, not a get-rich-quick scheme. It requires knowledge, compliance, networking, and hard work.
Most agents take anywhere between 6-12 months before they take a fee. Just consider how long the average property takes to complete right now, even with a cash buyer. Add to that the time to find your investor, a matching deal, then getting that over the line.
Success comes from building trust, delivering value, and operating with integrity, not cutting corners.
Why Busting These Myths Matters
Believing these myths can lead to costly mistakes, legal trouble, and damaged reputations. We know and appreciate there is so much noise out there on courses, at events, and social media - what's important is that you question statements that sound too goo to be true.
By understanding the facts, you can build a compliant, professional, and successful property sourcing business that investors trust.
Ready to Join the Top % of UK Sourcing Agents?
Our Members Are Leading the Way Forwards
We’re here to help you navigate the complexities of property sourcing, from compliance to strategy.
Let’s set you up for success with the right knowledge, tools, and support.
Get Started TodayConnect with us ❯
About Us
Registered Office: Unit 4, Clitheroe Business Centre, 105 Whalley Road, Clitheroe, Lancashire, BB7 1HW
VAT Reg No. VAT Reg No: 385 4371 71
ICO Reg No: ZA804627
Registered in England: 13002455
