Letting fee?

[Monopoly]

Hey NotAllPMsRBad,

I never said PMs should be beaten down, certainly not mine; they're a great bunch, and I know they work professionally (and hard at) managing my properties. They save me a great deal of time and headaches!!

All I'm saying is, I don't agree with the "re-letting" fee to current tenants. Now some people here have expressed they are; that's fine.

Some are okay with, some aren't; as I said, no right or wrong on this one.

 

[tobe]

I have always crossed out the re letting fee in my rental management contracts. I havent found the agents then try to churn tenants. They are most likely on salary, or have a small incentive program, its not worth their time to get a tenant out just to get the advertising and re letting fee for a new tenant...
why do I expect them to prepare a lease for nothing? I dont, I think preparing a new lease, and sorting out maintanence, inspections, etc etc are what I pay the management fee for.
I alwasy try to reemember to send them a christmas card, and the one I have out of town gets a bottle of wine when I come visit (probably once a year). They have a lot of properties/landlords/tenants to look after, I want them to remember who I am, and look after me....

 

[dan c]

Depends on how much value you hold on having a signed lease in place, I guess?

Well how would you quantify that? Surely it would mean different amounts to different people. So the PM could charge one client $300, yet charge another $50, under the 'value' system.

Has the PM used special skills in getting the tenant to sign a new lease? Generally not, as the tenant wants to stay (or they wouldn't renew) and the owner is happy for the tenant to continue.

There is value in having a lease in place, sure, but how much of this is attributable to the PM?

 

[JamesGG]

Well how would you quantify that?

With risk of sending this thread a little off-topic...

Talking strictly from a business point of view; you can't, or at least not directly. As you say, some people place higher value on a particular service than others.

So, a business needs to set a price. They can use competitors as a guide, or simply pull something out of thin air and test the market. Not everyone will say yes; some will say no and you will lose some business. However, I believe that you will gain more than you lose and the margin on what you keep will be much better. One of my old mentors used to suggest that if everyone is saying yes, then the market is telling you that your prices are too low.

Being able to sell the value, rather than try to sell the product or service, will generally get better results for the business.

In this case, a property manager telling you that they're charging $200 just to print off a pre-set form, clearly doesn't go down well. Telling you that they're charging $200 to secure your quality tenant in place for an extended period at a higher rent and that you don't have to do a thing; well, there's value in that.

 

[battler]

Regarding the reletting fee, if a lease expires and then goes month by month, if the tenant requests a new fixed term lease shouldn't this cost be born by the tenant?

 

[Dazz]

No it shouldn't battler. The Tenant's Union Advocacy beat you to the punch about 20 years ago.

It's against the law battler to do so. Read your RTA legislation for the details.

 

[battler]

My agent must be behind the times a tad, they have been charging a reletting fee of $30 for over 20 years, $15 from the tenant and $15 from the landlord.

 

[JamesGG]

My agent must be behind the times a tad, they have been charging a reletting fee of $30 for over 20 years, $15 from the tenant and $15 from the landlord.

In Victoria?

51. Certain charges prohibited
(1) A person must not demand or receive from a tenant a charge or indemnity for a charge in relation to the making, continuation or renewal of a tenancy agreement that is a premium, bonus, commission or key money.

A landlord or agent cannot charge for:
• showing the premises to a prospective tenant
• issuing a rent payment card
• the establishment or use of direct debit facilities
• the making, continuing or renewing of a ‘Residential Tenancy Agreement’ (also known as a premium, bonus, commission or key money).

 

[battler]

In Victoria?

These are in NSW, thanks.

 

[JamesGG]

These are in NSW, thanks.

Ah, that explains it. My apologies, just guessed from your location.

For those playing at home;

12 Costs of preparation etc of residential tenancy agreement

(1) The costs of preparation of a written residential tenancy agreement by or on behalf of a landlord are payable in equal shares by the landlord and the tenant.

 

[battler]

Thanks James, that may ease the burden for some of the previous posters.

 

[rugrat]

Look I think PM's should get paid. BUT I am getting really frustrated lately at how many various charges they have on top of their management fee! Seriously! If I am paying 9%+GST as a management fee, what management am I actually paying for when leasing, inspections, tenancy reports, account statements, organising work done to the property, etc, etc are all added as fees in addition. I understand that something which is likely to be a one off (like tribunnal representation) should fall under a seperate fee - but really in my quest to find a PM I have come across so many additional charges for things that CANNOT be left undone during the course of even the most basic management. Really these things, such as inspections, are an intrgral part of the property managing process.

 

[Xenia]

LOL!!

If someone halved your salary because they questioned the validity of what you are doing after a signed agreement for a certain amount what would you do?

I do not like letting fees either and do not have them in our property management office, however it is very difficult for agents who do offer that fee structure to always be questioned and invalidated yet expected to perform effectivley.

Property manager burnout (caused by landlords) is a huge issue in this industry.

That's like going into a restaurant and arguing with the menu prices, you have the option to go somewhere cheaper or cook at home.


The option to self manage and not use agents at all is also always available.

 

[cu@thetop]

LOL!!

If someone halved your salary because they questioned the validity of what you are doing after a signed agreement for a certain amount what would you do?

I do not like letting fees either and do not have them in our property management office, however it is very difficult for agents who do offer that fee structure to always be questioned and invalidated yet expected to perform effectivley.

Property manager burnout (caused by landlords) is a huge issue in this industry.

That's like going into a restaurant and arguing with the menu prices, you have the option to go somewhere cheaper or cook at home.


The option to self manage and not use agents at all is also always available.

What is going on Xenia? This is your second post taday that I find myself agreeing with!

 

[rugrat]

I don't want to half anyone's salary, I just hate how so many REA's in Canberra seem to charge twice for the same service. They are already charging significantly higher then the rest of the country and then have two pages worth of 'other' charges, for things which are what managing a property is all about. For example, one of the REA I am talking about charges $300per inspection, another $150 for the inspection report, and then another charge {which is variable price} again to 'follow up' on any issues raised by the inspection - they also charge a letting fee of two weeks rent and then a fee for checking the tenants references, and then another fee for a post letting follow up and another inspection fee thrown in on that. Would run through the rest of the fees for this one REA, but like I said it is 2 A4 pages long. This is obviously an extreme example.

It isn't all of them, but it is alot of them here. It is almost like they are trying to make themselves look competitive by lowering their management rate, but then add the cost back in anyway through 'extra' charges. I would rather the all inclusive %rate.



Have a PM in mind, they aren't the cheapest (the % rate is mid range), but they are alot more reasonable then alot of the others and don't have the pages full of extra fees. I have considered self managing, but am well aware of how much is involved and would prefer to pay another to do it for me.

 

[rugrat]

At the restruant I wouldn't argue with the prices, I would take them at face value. BUT if they tried to then add extra charges for the use of the seat and the eating utensils and another for putting the food on the plate and then again for putting the plate in front of me.... well I would be taking myself elsewhere.

 

[skater]

LOL!!

If someone halved your salary because they questioned the validity of what you are doing after a signed agreement for a certain amount what would you do?

.

I don't think anyone is arguing over paying whatever the agreed price is, once the agreement has been signed. However I would look carefully at the agreement and discuss anything that I found disagreeable before putting pen to paper.

 

[skater]

For example, one of the REA I am talking about charges $300per inspection, another $150 for the inspection report, and then another charge {which is variable price} again to 'follow up' on any issues raised by the inspection - they also charge a letting fee of two weeks rent and then a fee for checking the tenants references, and then another fee for a post letting follow up and another inspection fee thrown in on that. Would run through the rest of the fees for this one REA, but like I said it is 2 A4 pages long. This is obviously an extreme example.

This is just daylight robbery. In this example, the % management fee appears to be just to collect the rent, then they are charging extra to do the actual management of the property.

I think management of a property should be an all inclusive fee. If the PM puts a poor tenant in place and they have to do extra work because of this,then they should be the ones to bear this cost, NOT the landlord. Of course, even the best PMs will have the occasional bad tenant, but what incentive is there to actually find good tenants if they are charging extra for all the componants of the actual management?

Like I mentioned earlier, my local PM doesn't even charge me for tribunal visits, even though I have agreed to pay for it. I didn't tell her not to charge (and maybe she doesn't because I have several through her), and if charged would happily pay the fee.

 

[ACTInvestor]

Rugrat,
if you are in the ACT I have come across a company who's fees are all inclusive. They have been excellent so far and charge one management fee and a letting fee, but no admin, condition report or inspection fees. I highly recommend them. Let me know if you want the name.

 

[dettetynik]

My HUge Fess Can Anybody Help Please

Hello I have read most of the post here is a list of my fees, can anybody please help me, I am so confused

207 24/05/10 Title Search - New Property Murphy Boyden Real Estate 18.00
(Includes $1.64 GST)
413 24/05/10 Website Entry and Rent List Report Murphy Boyden Real Estate 66.00
(Includes $6.00 GST)
411 24/05/10 Lease Sign 31/03/10 Murphy Boyden Real Estate 44.00
(Includes $4.00 GST)
460 24/05/10 Letting Fee - New Lease Murphy Boyden Real Estate 1100.00
(Includes $100.00 GST)
464 24/05/10 Property Condition Report Murphy Boyden Real Estate 220.00
(Includes $20.00 GST)
204 28/05/10 Special Meter Reading Water charges 11/03/- 17/05/ Water Corporation 60.45
338 28/05/10 Mow & edge lawn & remove palm fronds Kalgoorlie Home & Lawn 99.00
(Includes $9.00 GST)
Total for all properties 1607.45 2166.66
481 *Management Fees 184.17
483 *Postage & Sundries 7.00