Vendors staying on as tenants - PM charging letting fee?

Discussion in 'Property Management' started by Birdseed, 12th May, 2017.

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  1. Birdseed

    Birdseed Well-Known Member

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    Hi folks,

    Have recently purchased a property and have the vendors staying on as tenants for a period.

    I've just received my first statement and the PM is charging a $600 "letting fee" (weekly rent is $360) despite the tenants already being in place as per arrangement prior to purchase.

    I understand there may be some paperwork involved in moving the tenants onto the rent roll/taking of bond etc. , but I don't feel that this charge is appropriate given there has been no advertising or effort into placing a tenant.

    I plan on challenging this and asking for a refund, but would be keen to hear the opinions of some of the PM's out there? Or has anyone else found themselves in this situation?
     
  2. WestOz

    WestOz Well-Known Member

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    Don't know what their letting fee is but mine was 2 weeks (+ advertising etc) so maybe they gave you a $120 discount?

    There's obviously a fair bit of time etc to set it all up legally for you.
     
  3. D.T.

    D.T. Specialist Property Manager Business Member

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    Still had to negotiate rental amount and conditions? Still had to do ingoing condition report so you'd be covered for future insurance claims? Still had to write up a legally binding document? Still had to lodge a bond with authorities? Still had to use their expertise?

    If you go get your eyes tested and the optometrist says they're fine, do they still earn their consult fee?
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Are they tenants under a lease or is it a licence to occupy. If a licence you have to determine if this falls under the relevant definiton in your management agreement.
     
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  5. JacM

    JacM VIC Buyer's Agent - Melbourne, Geelong, Ballarat Business Member

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    Yes PMs will always charge a letting fee in this situation, because as has been pointed out, they still have to do entry condition reports etc. They wouldn't have charged you an advertising fee though.
     
  6. Propertunity

    Propertunity Well-Known Member

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    What T&C's did you sign up for when you (presumably) signed of on the MAA (managing agency agreement)?
     
  7. Perthguy

    Perthguy Well-Known Member

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    Personally I think this is a good deal. My last letting fee was $900 for a vacant property renting at $280 pw. That was a discounted rate for Perth and the service was fantastic, so I was happy to pay.

    Standard is 2 weeks rent so $600 is a discount and a good deal IMO.
     
  8. Marg4000

    Marg4000 Well-Known Member

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    All that has been saved by the agent is advertising costs, and possibly the absorbed cost of open houses.

    On the other hand, you have saved through no vacancy time.

    Sounds like you got a fair outcome.
    Marg
     
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  9. Birdseed

    Birdseed Well-Known Member

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    Thanks everyone for the feedback.
     
  10. Possumcreek

    Possumcreek Well-Known Member

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    I think there is no harm in enquiring about getting a reduction.
    When the current tenants move out will you be renting again? Using same agent?
    They may make an exception.
     
  11. DaveyB

    DaveyB Well-Known Member

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    All that work for basically zero ongoing given short stay?
     
  12. dabbler

    dabbler Well-Known Member

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    What is your management agreement and what does it specify ? If no agreement, then......

    If you did not read it.........

    Normal is 1 weeks rent + GST + a lease prep fee that is usually small in NSW and QLD, of course there will be others that have different fees.
     
  13. dabbler

    dabbler Well-Known Member

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    Not in NSW.

    If you ever see me or I ever ask you about Perth Mr Perthguy, can you please remind me to make sure every deal has about 1.5k of fat for every year I intend to be fleeced by a WA agent :p

    PS I just worked out why no ones taking up the slack in the WA economy !
     
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  14. kierank

    kierank Well-Known Member

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    For our IPs in Qld (I have no idea what it is in ofher States), we pay one werk's rent + GST.

    So, in this case, that would be $396.

    To me, you have been ripped off by $200 BUT you need to read your Management Agreement. What did you sign?
     
  15. Perthguy

    Perthguy Well-Known Member

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    Wow! I have been investing in the wrong states! In Vic the best price I could get was around $1,000 for a full find and sign up. That's fairly typical in Perth too.

    That is leasing only though, no management. Does that make a difference?
     
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  16. dabbler

    dabbler Well-Known Member

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    I do not know that VIC is so much different, maybe @Lil Skater knows what the average is, or someone else, I would imagine it is better than that.

    Sounds like trying to get a years worth of commission to do the initial find and sign up, but surely 1 or 2 weeks rent plus lease prep fee is the same in either scenario, so if rent is 500/week a grand is not out there I suppose.
     
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  17. kierank

    kierank Well-Known Member

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    I don't know but I could imagine so.

    All of ours are under ongoing management, the longest with the same PM for 17 years and counting.
     
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  18. D.T.

    D.T. Specialist Property Manager Business Member

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    Just about everyone in SA charges 2.2 weeks. Most WA ones do as well from what I can tell, except they usually load every else on top - eg extra for ad, photographer, ingoing inspection, etc

    Yes. Most would charge more for a let only than a letting fee as part of a management. Its once off casual work rather than ongoing work.
     
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  19. Fargo

    Fargo Well-Known Member

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    You got ripped off in Vic to ! When I get a new manager in Melbourne they have to drop the letting fee if they want my business. They are very willing to do this to gain business.
     
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  20. D.T.

    D.T. Specialist Property Manager Business Member

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    What kinda reactions have you been getting? I'd politely decline to be honest.