Rental Basics in 77003>Question Details

Juan, Home Seller in 77003

The realtor helping me rent a house in Houston includes a 1mo comission not only for the 1st year, if the same tenant,but thereafter, is that standard

Asked by Juan, 77003 Sat Jun 11, 2011

In he contract to rent listing in my home the realtor included an item stating:
Renewal fees:if landlord renews or extend a lease with a tenant procured under this linsting at the time the renewal will pay the broker the fee described bellow..... (a) 100% of one full month's rent.

is this commission normal in a exclusive right to lease agreement? is it standard to ask for 100%, eventhough the realtor wont be working at all at that time (1,2 3 years down the road). can this comission be negotiated down to cero??
I have a problem the broker/realtor is also trying to sell the house, and I singed a 1 year sell listing agreement with him.
Thanks for your help,

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Answers

14
Well here's the answer.

On commercial property, we always get ONE MONTH RENT (which is 8.33%) per year.

We don't collect the entire commission upfront (say a 5 year lease). Many agents do. Problem?

Yes.

1. If the broker finds a good tenant (that is one that remains for multiple years) is also good for the landlord. No turnover and someone that must be successful on the business (commercial) or one who is content in their rental.

2. Since I found you a good tenant, I should be compensated - for each year the tenant remains. To be successful leasing properties, you need to have a number of these "annuities". So if the tenant remains in place 8 years later, I know on the anniversary of the lease, I will get a commission. And what do the agent do? Probably stayed in contact with their client, didn't try to move them to another "better deal" (to earna buck).

The issue today is that many agents don't think LONG TERM. And many landlords don't want to pay.
Web Reference: http://www.rentlaw.com
2 votes Thank Flag Link Wed Jun 15, 2011
Your head is severely stuck in your ass, California Originating a Tenant is ~ 500 or 50% of first months rent and is normally 10% for a lease term renewal. If you proceed with a property management group normally there will be a "warranty" on the Tenant for example if they move out within prior to 75% completion of the contract they will originate a tenant for free.

I do not know where Texas Real-estate agent's get off believing listing something on MLS (hopefully accurately) and waiting for a call is worth 8.33% of the owner's income on the property. I have 4 properties in California and will be closing on my 3rd, (2nd rental) in Texas and I was disgusted at the audacity of my agent requesting an exclusivity for representation for me and any of my family members in the Houston area for 1 year let alone her asinine thought that a contract execution was worth 8.3%
Flag Mon Sep 2, 2013
Juan

I think what you want to know is "Does everyone work the same"? The answer has been proven by the responses, agents are independent and can write the contract the way they want. Everything in real estate is negotiated commissions and length of agreements are just two examples.

Talking to your agent and letting them know that you are not happy with the arrangement may be all you need to do. I know of very few agents that want to work for someone who is dissatisfied with them. This business is hard enough without having that kind of negative emotion added to the mix.

Having said that I would only ask for a year to sell a property if I thought that property wasn't going to sell very fast, it takes money to market a property and if it takes a long time to get it back I would not want it going to another agent after I spent my time and money on it. I am sure you can understand that. Houses that are leased and still for sell don't sell very quickly, you have a limited market for them. Many things to consider from the investors side so that may be why he asked for a year.
1 vote Thank Flag Link Wed Jun 15, 2011
Personally, I wouldn't expect a landlord to pay me a 2nd commission on a 2 year lease, or on a renewal. I feel that I got paid to secure a teanant, and if that tenant remains in the home........the fee I received covers that.

Now, that being said - if you signed one - what did you agree to in your listing agreement?

This is a point that can certainly be negotiated.
In my area, the tenant usually pays the commission, but even that is negotiable.

Good luck!
1 vote Thank Flag Link Sun Jun 12, 2011
Juan,

You have to read your listing agreement. A section talks about what your listing agent will expect if he/she leases the property. Possibly something equal to one months rent. Below that, the listing agreement typically discusses IF a) the lease is renewed and or b) the landlord sells the property to the tenant.

All agreements are negotiable between landlords/sellers and their listing agents. If you would have spoken to 1 or 2 more Realtors, you might have found different options. I typically do not charge a recurring lease fee, but would charge a commission for a sale as I would likely be involved with that transaction.

Normal? The wording is there for the Realtor to use. If you signed the agreement, then you agreed to those terms. A one year listing is a bit long in my book as I want to have the property leased or sold long before then. A question to the agent would have been why will it take that long to lease or sell it? As always, you can speak to the Realtor's Broker if you have any issues.

Good Luck!

Mark McNitt
Bernstein Realty
m# 832-567-4357
1 vote Thank Flag Link Sun Jun 12, 2011
If I'm understanding correctly, you've created a business relationship with a broker/REALTOR to either sell the house and lease the house. The broker has leased the house, and you have paid the agreed-upon commission for the lease. So, what is the problem with the broker having the listing agreement to sell the house? Do you think they should be paid no additional compensation if they sell it? Do you think that they should not be paid any additional compensation for their time and expertise in extending the lease if the current tenant extends the lease, thereby saving you paying a commission to again lease the house, rehabing the house for the next tenant, and who knows how long without any rental income from the property? Please clarify for me. thanks
1 vote Thank Flag Link Sun Jun 12, 2011
I doubt you would perform work for services rendered, and you should not expect a real estate agent to perform their services for free, either. Terms of the listing agreement can be negotiated, and the real estate agent has just as much right to refuse your terms as you do theirs.

Renewals take time and effort and input from both owner and tenant. If you feel 100% isn't a fair commission, talk to you agent and hear what they have to say about it. Too many people get upset about things they'll tell strangers, but never even bring up in conversation with their agent.
1 vote Thank Flag Link Sun Jun 12, 2011
Juan,

Everything in these agreements are negotiable until they are signed.

If you have not signed anything, then tell your agent that you don't agree with that. If they have an issue with it, then tell them you will find another agent.

Keep in mind what the property is like, what the monthly rent is, where it is located, and what the rental market in that area is like. If it is a property is a high end property in an area where rentals are only on the market a couple of days, then you might be overpaying for your agent to bring you a client. On the other hand, if your home is in an area where there are a hundred rental properties on the market which take months to rent and rent is very low, then your agent may be worth the money you are going to pay him.

Think about it this way: If you were in the agent's shoes, would you accept $500 to market a property for a month (keeping in mind that the agent has to pay taxes and potentially a brokerage split on the commission).

Would you expect to get paid $1500-2500 for 2 days worth of work if it leases quickly?

There are a variety of factors that go into rental listings, and each home is different. Think about what YOU are comfortable paying and what you would be comfortabe GETTING paid if you were the agent, again keeping in mind taxes and brokerage splits. Then negotiate with your agent on what you feel comfortable with.

It's more than real estate. It's RAYL-Estate!

Brian Rayl
Keller Williams Elite
972-949-4222
Brian@Rayl-Estate.com
http://BrianRayl.com
1 vote Thank Flag Link Sat Jun 11, 2011
The agreement is between you an the realtor. Whatever the agreement is between you and the realtor in writing is what is legal. In the listing rental agreement if the agent brought you the tenant you can be obligated to pay 100% of the rent because he or she did bring you the tenant. Now it is between you and agent if you do not agree to the 100%. If you are selling the house also the agent has is entitled to a commission as well whatever percentage was agreed to by you and the realtor. Hope that helps.
1 vote Thank Flag Link Sat Jun 11, 2011
Yes, the landlord is typically responsible for paying the agent if you sign a lease for another year.
But the commission is usually 50% of one month's rent unless it was the realtor's listing and she procured the tenant, then it's 100%. or if another realtor brings the tenant. Then 100% is split between the two realtors. Actual commission is negotiated between landlord and realtor. The realtor probably put 100% to cover the other 50% that would go to another realtor who might bring the renter. The bottom line is the commission is standard.
Wendy
1 vote Thank Flag Link Sat Jun 11, 2011
there is a paragraph in the lease agreement about that, so what ever is stated there. hopefully your agent reviewed that with you. hope that helps...
1 vote Thank Flag Link Sat Jun 11, 2011
Juan - glad it worked out for you!

Best wishes...........
0 votes Thank Flag Link Wed Jun 15, 2011
Thanks all for your answers. feedback, it has been very valuable. I talked to my realtor, we came to terms in the lease agreement terms, he won't be asking for any renewal fee... and he will add the house address to the sell listing.... i don't know why we didn't press harder before to get that information on the listing.
Thanks,

Juan
0 votes Thank Flag Link Wed Jun 15, 2011
everything's negotiable. realtor's asking. you may refuse. nothing's standard regarding commissions. not even paying 6% to sell a house. many companies do the service for less, some even ask for more.
0 votes Thank Flag Link Sun Jun 12, 2011
Good morning Juan,

All terms are negotiable until listing agreement is signed. There is no 'standard' fee in our business, often vary. The Realtor and or his supervising broker have a duty to protect your interest. This agent must have explained listing agreement terms before signing. Tipically listing agents receive 100% of one month's rent - which are usually split 50 / 50 w tenants agent. Seldom listing brokers charge recurring commission every year lease is renewed or extended. If you have any concerns tell your listing agent, remember he / she works for you, or ask to speak to sponsoring Broker.

Good luck!
Mario Romero
Realtor Broker
0 votes Thank Flag Link Sun Jun 12, 2011
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