3.5% commission for PM

M

Marco

Hi all,

I have recently seen advertisements for 3.5% commission rates for PM's.

Has anyone had experience with REs offering such low rates in a city where 7% seems to be the norm? (Newcastle)
Perhaps there is more competitive pricing going on that I was originally aware of. However I have always believed that you get what you pay for.....

any thoughts?
 
Hi Marco,

I see you are from Sydney, it may be possible that these agents that charge 3.5% only target the top end of the market, ie. the $500 & $1,000 per week rentals, which if that was the case even at 3.5% it would be substantially more than the 5% my agent charges me for a $200pw property...

Examples at $500 & $1000 at 3.5% are:

$500 pw & 1 week letting fee (although may be 2 weeks letting fee?) is: $17.50 per week OR $910 per annum + 1 week letting fee = $1,410

$1,000 pw & 1 week letting fee would be $35 per week or $1,820 per annum + 1 week letting fee = $2,820...

Both are not bad in my books... (would be even higher if using 2 weeks letting fee)... with my typical IP in Melb at $200pw at 5% & 1 week letting fee, my agent would be making $10pw OR $520 per annum + 1 week letting fee = $720 (much less than either of the above)...

I would be worried though if that is the flat rate for the lower end of the market, as you really get what you pay for at the end of the day (also need to look at what other charges apply, ie. inspections, etc... which are included in my 5%)...

Cheers,

MannyB.
 
Marco,
Don't forget that advertising is a clever way to get you to ring. You will probably discover that there are indeed "conditions" attached to the special rate. Perhaps, as Manny has suggested, it may only apply to high rents. Or, it could be if you had multiple properites managed by them, or it doesn't include inspection fees, condition report fees, statement fees etc.
Find out mate and let us all know!
 
Marco,

Hi. I am in Sydney where the often quoted commission is 7%.
However, I have an agent who charges 5% and does an excellent job with no other hidden costs. With another property, when there was hot competition from another PM one PM offered to work for no commission at all!! (I think that he was hoping that I would use him to sell). I had a PM who charged 7% and did a lousy job (I should say DIDN'T do a job). So, I guess, check out for hidden costs, who do you like and communicate well with (good communication and understanding is worth a lot of money) and perhaps try a couple out sequentially over short terms. There are lousy and expensive as well as cheaper and excellent PMs out there.

Good luck.
 
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