REIQ - 30 day termination / advertising with different agent

Hi.

In 1 week we have a tenancy lease about to expire in SE QLD on one of our IPs and the tenants are moving out. Despite our current agent saying they will re-list the property 4 weeks prior to vacating this has not been done. (unfortunately another example of them dropping the ball).

We have not given the agent 30 days notice yet to break our current property management agreement (reappointment of property agent - form 6) as we are cautious of the complexity with the tenant moving on at the same time (eg. potential damage/bond etc). We understand the agreement can be terminated earlier if both parties are in favour and we'll contact them asap however before that discussion we'd like to know - if they say no can we sign and advertise with a different agent prior to the 30 days expiring anyway? Does the 30 days simply mean we need to pay the existing agent their fee's or does it also mean that they also have sole/ complete management and we can't even advertise with a different agent?

We have a second property with them so we hope they don't demand 30 days, plus there will be no tenant. To be reasonable we were thinking of making it 2 weeks post the date that the tenant moves out (3 weeks from now). The more important thing though is knowing our rights to advertise now with a different agent.

Any advice appreciated.

 

This is a very common issue, but also a very complicated one. I'll try to keep this straightforward without waffling on...! There are a hundred other potential factors here, but I'll cover 95% of cases below.

There are two subjects of consideration here.

1. Termination Period and Overlapping Agency Agreements.
When can you put this property in the hands of the new agency? As you correctly stated, all Form 6's in QLD are fixed with 30 days notice unless mutually agreed to end sooner. It is unlikely that your agents will agree to terminate early without financial compensation- often agents are happy to release keys early if you pay out management fees to the end of the termination period. I have seen some particularly creative and spiteful demands, but it's uncommon. They are ABSOLUTELY expected to carry out their duties as your agency (i.e. exit report, re-letting, etc.) during the termination period to the best of their ability. Bit difficult to enforce, but it's a great bargaining chip to getting them cooperating on a changeover- way more work than it's worth if they're about to lose the business anyway.

You CAN have more than one Form 6 Appointment of Agency in effect, which means you can engage a new agent to advertise immediately. The in-going agent is required to provide you with a statement (see attached file for my example) warning that you can be responsible for extra fees etc and you are advised to seek legal advice. Realistically in your case, it will probably mean you're paying double fees while those tenants are still in place. Some agents also have stupid fees like "file closure", but it's not common- bad form. You can check your Form 6 with them to confirm.

2. Vacate and Re-Letting.
The crux of this is whether you think the old agents are bad enough that the new agents are going to do a better job of exiting the tenant and re-letting despite the handicap- i.e. new to the scene, relying only on what is probably poor paperwork provided by old agent.

The new agent wants to barge their way in as quickly as possible and familiarize themselves with the situation, make sure they get all the paperwork they can- entry photos almost always fail to change hands! Contact the tenants, buy them chocolate, meet and greet. Organize photos if necessary, find times that suit the tenants for inspections, do a pre-exit inspection to streamline the vacate process. Make sure everyone's timelines match up (vacate vs. availability, necessary maintenance? etc.).

Word(s) of warning- often changing hands around a vacate coincides with a ****** tenant.
If there's an insurance claim involved, you want a competent agent handling it. Insurance companies don't really care who's providing the information, as long as it's provided. If it exists, either agent can provide it. Unfortunately most agents don't have the time, care factor or expertise to effectively joust with insurance companies who hire well trained and paid staff specifically to pick through and minimize your claims.
On the other hand.... tribunal members DO. NOT. LIKE. new agents. If your new agent has to take the tenant to tribunal, your small chance of full justice is cut to pieces.
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Although patterns develop and situations tend to turn out a certain way, we are dealing with people here. All manner of curve balls can come from your old agents, new agents or tenants....! The above discusses the vast majority of cases, but you need to make an informed decision based on the facts available to you and be ready to adjust course based on the situation as it comes.

For what it's worth, In my experience, I've found that it's usually best to bite the bullet and change asap- if the agent has dropped the ball during a tenancy, it's not likely to go any better for you over a vacate and re-letting- that's when you are most vulnerable to negligence causing financial loss.

 

Wow Thomas, thank you for the in depth reply. Great information. It’s particularly good to know that we can advertise ASAP and we’ve emailed the current agent so should hear back today. Whilst paying double management isn’t preferable it doesn’t bother us as much as being able to deal with any conplexities that arise around damage/bond etc.

I’ll be going out to inspect the property the day after the tenant vacated and I’ve requested the agent not return the bond to the tenant until I’ve done this inspection and provided them with my feedback. This is in addition to their inspection which we should have prior to me going out.

Thanks again for the reply.

 

Unless they are completely incompetent (then why did you change earlier) I would personally keep the 1 PM on and get the new tenant then terminate.

If I was to use an assumption of 7.7% inc GST (assuming QLD here) at 500 pw that is $154.00 in PM fees to be paid for the 4 weeks wasted. So really you are expecting the second PM to technically get you about 5pw more or rented a week earlier than the other.

You also might have to pay a second lot advertising which will really impact my numbers .

 

Good point about the competence of the outgoing agents- I guess it comes down to the individual situation.

Outgoing agents would be idiots to advertise knowing they're being terminated, and you can often negotiate with the ingoing agent not to pay fees during that period.

That being said, $154 is a very small amount of money in the grand scheme of a botched bond claim.

 

Exactly but why did you hire them in the first place or more so keep them hired if they cannot do their duties. Typically a lease would be 12 months so really you had 10 months earlier to realise this .

 

Update. My wife and I have decided to offer our current agent a second chance so we’re going to relist the property with them and review in the coming months once a tenant is in place. We decided that now is not an opportune time to move agents with the tenant moving on. There’s just too many variables that can occur. A good thing is that the agent has shown some maturity by admitting their mistakes and have advised they are making a few changes to offer us the service. My wife and I think we’re pretty reasonable people so given they’ve accepted responsibility AND still want to manage our property we will give them a second chance. Time will tell but I hope they just do their job. If it goes back to having micro-manage them we will have to move on though.

Thanks everyone for your feedback and comments. We’ve learnt a few things and I think we’re making the better decision at the moment.

 

Everything in hindsight Will. Things have become worse over the past few months and them not relisting our property for rent was the last straw. You’re right though, it is better to manage your PM before or after renewal time.

 

Update. Our tenants wish to short term renew so that has resolved some immediate issues. We’re goig to focus on getting another tenant in place and then review the agents performance in a few months in the middle of the next tenancy agreement. Thanks to everyone who replied.