Sourcing Question: Do You Have to Check Every Investor and Every Deal?

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Sourcing Question: Do You Have to Check Every Investor and Every Deal?

If you’re a property sourcing agent or deal packager, chances are you’ve asked yourself this question at least once (or several times): “Do I need to carry out due diligence on every investor and every deal I work with?

It’s a valid question and one that many agents have been asking more frequently in light of increasing regulatory checks and fines from HMRC.

Why Is Due Diligence Important in Property Sourcing?

It’s essential to understand why due diligence is a non-negotiable part of running a property sourcing or deal packaging business.

Due diligence is about ensuring that every investor you work with and every deal you complete, adheres to legal requirements and meets standards of trust.

It’s not just about ticking compliance boxes—it’s about safeguarding your reputation, avoiding legal repercussions, and eliminating risks such as money laundering or investor disputes.

“Due diligence is the backbone of ethical and compliant property sourcing. It protects both your business and your clients, setting you apart as a credible professional in the industry.” – Tina Walsh, CEO of the National Association of Property Sourcers (NAPSA)

What we find unfortunate, is that due diligence is the base of compliance – not a higher standard – and yet isn’t met by 99% of sourcing agents in the UK.

Most courses do not teach the due diligence process, particularly around anti-money laundering, and so many businesses are literally risking it all every time they onboard an investor or complete a deal.

Legal Requirements for Sourcing Agents and Deal Packagers

Investor Due Diligence

Yes, sourcing agents must conduct due diligence on every single investor before sharing any deals. This legal requirement ensures you verify that the investor meets the necessary criteria and prevents any involvement in fraudulent activities, including money laundering.

Here’s what investor due diligence typically includes:

  • Id Verification: Confirm their identity using official documents, such as a passport or driver’s licence.
  • Risk Profile Analysis: Assess their financial credibility, experience, and objectives to determine whether they align with the type of deals you source.
  • Anti-Money Laundering (AML) Checks: Ensure compliance with AML regulations by screening investors against databases for criminal or political connections.

Failing to carry out appropriate due diligence and risk assessments on investors can result in heavy fines, legal consequences, and reputational damage to your business.

Deal Due Diligence

Alongside investor checks, deal packagers and sourcing agents must also carry out due diligence on every deal they work on. This principle is similar to the obligations of an estate agent, holding you accountable for verifying the accuracy and legality of the property deal.

For deals, you must include:

  • Title Searches: Confirm property ownership and legal status.
  • Valuation Reports: Ensure the property is being purchased at a fair market value.
  • Legal Compliance: Verify that the property aligns with planning, zoning, and building regulations.
  • AML Screening of Sellers: Money laundering risks can arise on both sides of the transaction—always carry out appropriate checks on the seller.

Neglecting due diligence on your deals can expose you to significant risks, as non-compliant deals may impact your clients and ultimately damage your business’s credibility.

Why You Must Perform Checks for Every Investor and Every Deal

It might be tempting to cut corners or assume that a long-term investor or repeat seller doesn’t “need” to be checked again, however, the law doesn’t work on trust—it works on proof, and if something goes wrong and HMRC investigate, they will not treat ignorance as a defence.

As a sourcing agent, deal packaging business – or even estate agency – you have a legal responsibility under UK regulations and anti-money laundering laws to follow this.

Just think, an investor’s financial situation or a seller’s property details can change – increasing risk. Each deal, every transaction carries its own risk and so must be independently assessed, as cutting corners will ultimately lead to mistakes and damage your credibility.

“When you prioritise due diligence, you not only stay legally compliant—you also become known as someone investors and clients can trust. Trust is the foundation for scaling your sourcing business.” – Tina Walsh, CEO of NAPSA

Addressing Common Concerns

Concern 1: Do I really need to carry out these checks when working with a repeat investor or a simple deal?

Yes, even repeat investors and seemingly straightforward deals require checks. Circumstances evolve—what was risk-free last year may not be today.


Concern 2: Is due diligence expensive or time-consuming?

Tools and systems can reduce the time and cost required significantly. Think of due diligence as an investment in risk reduction—it’s always more affordable than the penalties for non-compliance.


Concern 3: What if I make a mistake despite conducting due diligence?

Good-faith effort counts. If you document your thorough checks and processes, you’ll be better protected legally than if you skipped due diligence entirely.


Concern 4: I don’t know what I need to be checking for with my investors and deals. What documents do I need to have?

Before onboarding any investor or completing a deal, make sure you understand the complete due diligence process. Once you have the process in place, everything else will fall together and it will become more streamlined with time.

You can complete our recommend course recorded by our CEO, Tina Walsh, through our training partner, Professional Sourcing Compliance (PSC), which offer a few options in just this area of due diligence:

Complete Property Sourcing Programme – £1,198 – all of the training and documents you need to set up and operate a professional sourcing business, plus one year of NAPSA Membership included. Read more here.

Or

Sourcing Essentials Course – £833 – if you’re just looking for process training and the documents you need to operate. Find out more here.

Pricing for both courses accurate as of 27th January 2025, however this may change if this post is viewed at a later date.