All agents are the same right? Wrong. The service they offer may seem the same, but they can vary greatly. So, to work out the value you are getting, you must dig into the detail.
Below we will explain the most common fees and give you tip for each.
Management Fee
This is the fee charged by the agent to collect and distribute your rent every month. Macquarie Bank release a benchmarking report every few years. Their latest edition shows that the average property management fee in Victoria was 5.8% of the rent (excluding GST). Below is an extract from their 2020 report.
The difference in management fees between most agents would vary by less than 1%. In our market, this is a saving of less than $5 a week, let’s call it a cup of coffee. So, what does that cup of coffee get you?
At Re-define Real Estate for that cup of coffee, we will pay your bills, handle your maintenance, lodge your insurance claims, and complete six monthly inspections as part of the Management fee.
That is $5 well spent, considering the amount of extra work involved with the recent addition of the bi-annual safety checks Consumer Affairs Victoria - Gas and Electricity Safety Checks.
Our Management Fee tip - Bundle the service you expect into a fair fee so there are no surprises. Remember though, you get what you pay for.
Leasing Fee
Or Letting Fee as it also known, is the fee an agent charges you to find a new Tenant. It normally happens once every year or so and is normally attached to some marketing expenses (more on this later). In most instances it will either be several weeks rent or a percentage of the annual rent.
Our Leasing Fee tip - Make sure this fee is charged on a pro rata arrangement. As an example, the annual leasing fee will be cut in half, should the agent only secure you a 6-month lease rather than the traditional 12-month lease.
Re-leasing Fee
This is the fee an agent charges to renegotiate a lease with the existing Tenant. An agent that charges a small fee or no fee is likely not going to do any work.
Our Re-leasing Fee tip – Make sure your agent has inspected the property, completed a detailed analysis of the market rent, and confirmed who is residing in the property (including pets).
Advertising Fee
Poor advertising (or even worse, no advertising) will have a negative effect on the result you achieve. All the major property websites will charge a fee for advertising. If you are not being charged something you should be wary. We discuss the importance of marketing in this blog Re-define Real Estate - Marketing for Success
Our Advertising Fee tip – Make sure you have your own ad online but don’t overspend.
Other Fees
Below is a list of just some of the other fees your agent might charge you. Photography, open homes, insurance claims and renovations are just some of the possibilities.
Our tip – Don’t avoid this conversation with your agent. Negotiate a deal and document it in a new Leasing and Managing Authority, so there are no surprises.
If you own a Melbourne inner-city investment property and are unsure if you are getting a good deal or not, we would love to speak to you. If your investment property is not inner city, we suggest you call a local agent and ask them what their fees are.
Please call Re-define Real Estate on +61 3 9000 0678 or email us on hello@re-define.com.au.
Sources: Macquarie Bank 2020 Real Estate Industry Pulse Check and Consumer Affairs Victoria’s website.