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Why is the co-broke commission so low on rental prorperties that you don't want to deal with them?

By Niki Fiala

Real Estate Agent with Great Homes Realty

June 19, 2009 05:57 AM

Has anyone out there noticed how low the commissions offered are on rental properties if I want to represent a tenant?

I have helped several friends in the past getting into privately owned condos or houses. Every time I had to do this, it took me almost as much time as selling them a property. The difference: the average commission earned on such a transaction is $50-200. $200 is the high end of it, under $100 is more typical.

Every time I did help somebody getting into a rental, the rate of return was so low and time lost was so high that it really negatively effected the rest of my statistics with regards to sales and actually making money.

When I help my clients find a tenant, I charge them half a month or 1 month rent and offer half of it to the co-broke agent. It actually helps the property rent faster. Because agents are more willing to participate and it is worth their effort.

I know I cannot as a single agent change the way everyone else does this, but I am shouting out to you all: what do you think? Can a change be effected in this direction?

Niki

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Thom Kraley

NewCastle Home Loans, LLC - Chicago, IL

As far as I know, agents in this market only put the tenants in front of units that are listed on MLS and therefore have a 1 month fee.

Jun 19, 2009 06:05 AM

Wendy Welborne-Kimery

Keller Williams-Lake Norman Mooresville,NC - Mooresville, NC

We are getting more and more clients who want to rent do to the economy. It does take time and you are right the payoff is low. The good thing in it is I stay in touch with them and am sure they will buy when the mkt turns around. Hope you have a good weekend.

Jun 19, 2009 06:59 AM

TIM MONCRIEF

Tim Monciref - Austin, TX

Over 2,000 homes sold…..

Not to be mean, but you may want to re-evaluate your business model. I can't make money on $2000 rental commissions, but I also have a crazy high overhead. If it does not financially make since, I refer it out. Any leases this past year we have increased the commission rate to gain a quicker lease and to allow us to do more than most could possibly do with a lease. I only do one month's lease as a commission, and nothing below $2500 a month. Financially, I lose money below that in our model.

Jun 19, 2009 07:53 AM

Niki Fiala

Great Homes Realty - Clearwater, FL

Your Real Estate Consultant for Life

Thanks for all your comments.

Tim, Thanks for your imput. My broker stopped all property management activities in our office and referred all of our accounts to other property managers. I definitely do not specialize in handling rentals. When I do it I do it as a favor to some people that I want to help out. I think what I have to start doing is charging the person that I am helping a fee. I have done this with buyers that spent $25-35K on a condo. And everyone was happy in the end.

Jun 22, 2009 07:33 AM

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