Real estate rental fees-
I recently spent some time with a young lady, helping her find a new home for her family. The day came when she finally found a condo that met her needs. She decided she wanted to rent it, except, she said, she didn’t want to pay the fee for the REALTOR®. She was already well aware of the procedures and the associated fees. In our area the process typically requires that the tenant pay a one-month fee. But she didn’t want to pay, which made me wonder if perhaps potential renters need a full understanding of why a fee is required.
What does the REALTOR® really do anyway? Open a door or two?
The process to get a rental client into a new home is much more involved than opening a door. Typically, finding the right rental for a client and getting that client into the rental includes the following:
- Fully understanding the client’s requirements. The where, what, and how much. This requires having an in-depth discussion of what the client is looking for.
- Finding potential matches. If there aren’t any, which is common since rentals typically get rented so quickly, continue to hunt for matches daily. Look for homes that are not in the MLS system.
- Set up the showing route. Homes could be spread among different towns, so ensure the driving route makes sense.
- Set up the appointments. This could be as easy as clicking a button or making a phone call and can also include getting instructions for access into each home. Combo lock? Electronic key? Owner access?
- Repeat the last three steps as many times as needed until a place is found.
- Complete all required paperwork including state disclosures, rental application, credit check documentation, and other paperwork.
- Negotiate the terms with the other agent, which could include price, move-in-date, pet acceptance, cleaning and more.
- Sell the client. Make sure the landlord’s agent/landlord knows why the client would be the right tenant.
- Set up and attend lease signing. Ensure all required paperwork is completed (i.e., lead disclosures).
That’s it! Finding the right rental home for a client is more than just unlocking a door.
Doesn’t my real estate agent get a salary? Isn’t the fee just a bonus?
Um. No. There seems to be a lot of confusion regarding agents and the way they get paid. Real estate agents get no salary. At all. No weekly or monthly paycheck comes their way. The only way they get paid is if they get to the closing table for a buyer or seller, or get to the lease signing table for a renter or landlord. That’s it.
All the researching, scheduling, driving, gas and negotiating are done on their time, and at their expense. So the rental fee is not a bonus; it’s their salary.
Why should I pay an entire month’s fee?
The fee structure for renting a home varies from state to state. However, in my area of Orange County, New York, the tenant usually pays a one month fee when they sign the lease. The average rental price in Orange County so far this year is slightly under $1500, so it can be a hefty check to write. Does that work above really deserve a fee of $1500?
It may! But the reality is that the check is split four ways; it goes to the landlord’s agent, the landlord agent’s company, the tenant’s agent, and the tenant agent’s company. While it could be argued that perhaps the tenant should only be responsible for their agent and their agent’s company, unfortunately in this area, they are responsible for the entire sum.
So, if you have a real estate agent who represents you in your search for the right home and you have to pay $2000 for the one month fee, your agent could be making approximately $450 gross, before taxes.
I hope the above explains why a fee is required to rent a home, and properly prepares future tenants for the rental process.
If you have a rental need in the Orange County NY area, feel free to contact me!