Signs out front, but the home stays empty.
Empty rentals cost owners money. This is not some great revelation. It is a fact. People that own homes they rent, usually do not have never ending reserves to cover the cost of property not producing revenue for months on end. You need to have the home rented. Some people try to rent on their own. They assume that a sign out front and an add in Craigs List will get the job done. Some are successful. The rest are left to watch a reserve account slip away.
Some people believe that using a Realtor is the answer. The Realtor will advertise the property and gather the necessary income needed to determine whether or not an applicant is a good choice. There is a cost to this route. Most companies ask that an owner pay one months rent in exchange for the services. The agent smiles and says that they will offer a portion of the fee to an agent that brings a new tenant to the owner. This seems like a good solution to the problem.
Still….it does not seem to rent. You read the papers. You know that the demand for rentals has increased. What ever could be the problem.
Most agents do not want to handle renters.
Oh, you can argue that a good rental agent is building a pipeline of future buyers. You can argue that in this economy any paycheck is better than no paycheck. You can say a lot of things, but most agents just don’t work with people looking to rent.
Now some might argue that the fair housing laws put the fear of God into agents. I don’t think so. The fair housing laws only scare those that have less than fair housing motivation. The law is there to protect, not hinder renters. No, the law is not the reason. Some others might argue that showing rental property is very time consuming. It really is not. It is no harder to show a home for rent than it is to show a home for sale.
No, I think one of the main factors that stop agents from showing rentals has to do with the listing agents. You see, they may charge one month’s rent to the owner. In the DC area, that can be anywhere from $1000 to $5000 dollars. The hidden secret is that they only “share” a small portion with the agent bringing the renter.
There are more homes than anyone outside the real estate industry can imagine that are offering 20%, 25% or less as the amount shared with the renter’s agent. In some cases, that equates to around $300 in pay for the time, effort and expertise used to accommodate the renter. If you deduct the cost of driving them around, the time spent counseling, etc., the amount of hourly compensation is minuscule. Faced with the paltry return, some agents determine that it is not cost effective to handle renters and make a business decision to turn down any requests.
Whether it is fair or not, agents bristle when they perceive that they are receiving less than a fair share of the compensation in any transaction. Blogs, message boards, water cooler conversations often share heated exchanges regarding commission splits on home sales that are less than 2.5% or 3%. If the conversation turns to rentals, everyone chimes in on how little is earned for the effort used.
Now there will some “smug” agents that respond to these complaints with “You should guarantee your pay with your client and let what we offer offset what they have to pay.” This is just a simple way of avoiding the truth. Agents that pay less than 50% value the buyer/renter agent at less than 50% in the transaction. They are telling you in black and white that their efforts are more valuable than yours.
Folks renting ought to know, that smiling listing agent is hoping to pocket the majority of that fee you are paying. They may offer many reasons why there is little traffic. If fewer agents are working with renters, there will be less chance for you to stop the bleeding.
If you have property that you need to rent, we share 50% or more with cooperating agents. We share 50% or more with cooperating agents on sales as well. We work with renters and we get it. We believe that agents acting as buyer/renter agents are equally valuable in every transaction.
We just think home owners ought to know what goes on behind the scenes.
MacArthur – Tudela
Century 21 Redwood Realty