The Risks of Using a Sourcing Agent to do a Social HMO Property

The Risks of Using a Sourcing Agent to do a Social HMO

You can not make this up. We viewed a property, put in a cash offer that was accepted. However 2 weeks we were told after opening a file with our solicitor and costing us money, that we were Gazumped. Someone came in and offer 10k higher than us. We thought, good luck and moved on.

However seems we did not move on. We received an email offering us the same property now under contract with the same housing provider we have been supplying. We thought if the numbers were similar to our costing, that we would buy it as it would cash flow immediately. This would save us time and allow us to compound more money.

We asked why they were selling as they just purchased and our motivation is to own these for the next 10 years plus. We were told, this sourcing agent sourced it for an overseas investor and wants to flip it. Fair enough…if the numbers worked and all was in order…planning permission…building regs…FRA…approvals from the police, approvals from the council…HMO license etc we would consider purchasing the property.

This was a 7 bed and we had planned to do a 6 bed in order not to have to get planning permission which in most cases gets denied in this area due to neighbours, parking etc. Obviously we checked the councils website to confirm that there was planning permission. In short, there was no planning permission on the website that we could find. We asked the vendor to send us the planning permission however now 3 days have passed and no planning permission.

Bottom line it seems there is no planning permission & as if they wanted to sell a property for almost 300k, it would have been supplied immediately. If there is no planning permission, this gullible overseas investor has an issue. The property has very little value other than brick and mortar. It would also stand to reason that this overseas investor now will be upside down if there is no planning permission. This property is not compliant and the council can easily shut it down.

This is why we only sell tenanted, contracted, tenanted properties will ALL legally required requirements. Properties that are not compliant stand a myriad of issues. Gullible overseas investors trying to use sourcing agents…just have 2 words…Good Luck. Seen and heard so many nightmares. These gullible overseas investors might think since they went to a course that they know what needs to be done…however just 1 mistake and the investment potentially can enter the bin.