Sale fee

[Francesco]

My new property manager wants me to sign an exclusive management agreement. It has a 'sale fee' clause which states:

"If the property is sold (whether during or after the term of the Agreement) to any person who has been a tenant of the property during the term of this Agreement, then the owner will pay to the agent a sale fee of 2.5% inclusive of GST, of the selling price of the property."

It seems the property manager is seeking to get a fee if the property were sold to a past tenant as the commission for selling a property is about 2.5%. However, could the wording be taken to imply duplicate payments, ie forking out up to 5% when selling the property?

It seems a common ploy by property managers to get something 'down the line'. I wonder what steps experienced investors have taken beside agreeing with the clause.

 

[turk]

Cross the clause out and sign that section.

 

[travelbug]

Ask them what they are doing to earn their money.
The tenant could see it advertised and go through the listing agent (not necessarily direct to you) so then you have 2 agents fighting over the commission.

As mentioned- tell them they're dreaming and -cross it out.

 

[Propertunity]

Cross the clause out and sign that section.

^ ^ what he said & travelbug.

If you want to sell to a tenant or anyone else that's your choice. You can do it yourself or appoint any agent you want.

A PM agreement is not (or should not be) used as a pseudo-selling agency agreement.

 

[Scott No Mates]

Cross it out. If the agent won't accept the change then find a new agent.

 

[boomtown]

Classic. We should start a collection of bold and beautiful clauses.

 

[russellpeter]

they should not get a fee for this.

some agencies if they refer a Property management to a selling agent will get 20% of the sales comm but i have never heard of this.

what happened if you list the property with an agent and 2 months Later an old tenant buys the property. the selling agent is not going to say its ok give the commission to the PM.

cross it out they will not say anything.

 

[Francesco]

Thanks everyone for your collective consensus. I am emboldened to strike the clause out and see what happens!

 

[Jacque]

Hi Francesco

Not as common as they used to be but I've deleted a few of these clauses in my time

At least you read your agreements!

 

[Jtkumnick]

Tell 'em they're dreaming

 

[Andrew_A]

Wow.. what a clause.. impressive!

Cross it out and initial for certain. Oh.. and read the rest of the agreement very carefully as they have some nerve

 

[landlubber]

Get out now !

I wouldn't deal with these b-stards on principle. Anybody who thinks like this will screw you anyway they can. Plan your exit from this business arrangement now. Remember ...YOU are the customer !!!
LL

 

[Perp]

Whilst I still think you should strike it out, I wouldn't automatically label them as greedy *******s for trying it; I've seen this clause more than once before in PM agreements, to the extent that I thought it was standard practise.

So strike it out, but I wouldn't paint them too negatively for trying it.

 

[landlubber]

Whilst I still think you should strike it out, I wouldn't automatically label them as greedy *******s for trying it; I've seen this clause more than once before in PM agreements, to the extent that I thought it was standard practise.

So strike it out, but I wouldn't paint them too negatively for trying it.

Well I sure would. And not just greedy, but sneaky and underhanded to boot.
And at the FULL commission rate no less. For virtually NO work. What blatant opportunists.
LL

 

[Francesco]

Hi Francesco

Not as common as they used to be but I've deleted a few of these clauses in my time

At least you read your agreements!

Good to know that usage of these clauses is trending downward in Sydney. However in Canberra they are quite common among the real estate agencies. If the message goes out to ACT PIs to follow your example we may get less angst with our PMs.

 

[Francesco]

I wouldn't deal with these b-stards on principle. Anybody who thinks like this will screw you anyway they can. Plan your exit from this business arrangement now. Remember ...YOU are the customer !!!
LL

LL I agree that in principle these clauses intend to extract disproportionate payment for the work they have already been paid. Seems mercenary, but the problem is this practice is widespread in Canberra. A landlord has to be resolute in deleting the clause and attempt to get a fairer deal with a take-it-or-leave-it attitude.