Estate Agencies - A few questions (Renting & Selling)

[Vini]

We currently rent via an agency, does anyone know what the average monthly % an agency will take before the landlord gets their cut?

Our landlord at present rents via an agency as it's his first time letting, we hate renting via agency mainly because of the signing on fee, which by all admission has passed, but on one hand it is nice to know that we have a contract that should mean things get done if there are any problems...

Recent conversations with the landlord directly have suggested he's not happy with the Agency, so I'm wondering if we can use this to go direct. Also, we mentioned to the landlord before we started to rent the place, that we might like to purchase the house if things work out well.

Obviously if the agency are only taking £10 a month, then knowing that they are bound to fix problems in a timely manner would make staying as is worthwhile.

However if that figure is £50-100 then I would imagine it's in the landlords best interest to consider going direct.

We're going to talk about having the rent we've paid deducted worked into 'a deal' if we do take on the house.


Also, what's a rough estimate of an agency selling fee? 2% or the like?

[finlay666]

I think its dependent on the area the property is in and company it's with tbh, I think one of the places I was staying in Reading was ~5% but another property the landlord had was with another company and it was less or more... It was a while ago now tbh though

[Vini]

I accept I won't be able to get an exact figure, because as you say it will vary on PCM/Area/Company etc... A rough guide would be sufficient.

If it is around 5% then it's not as much as I thought they would be taking.

[finlay666]

If it is around 5% then it's not as much as I thought they would be taking.

I can't remember which property it was for or I'd be more help as it may also be based on size of property/rooms etc. Sorry I can't be more specific but it was a long time ago

[TheAnimus]

Sometimes its as low as 3%, but that might be more because 3% of £2,000 per month isn't a bad racket.

They are all useless ******s who seam to do nothing but upset the tenant and the landlord when there is even the slightest issue, and when there isn't they don't have to do anything to justify their monies.

But they did 'find' you and I wouldn't be surprised if they have a contract that prevents you and your landlord cutting them out of the loop.

[Vini]

I can't remember which property it was for or I'd be more help as it may also be based on size of property/rooms etc. Sorry I can't be more specific but it was a long time ago

Hey don't worry about it. I was thinking it would be more like 10%, but then you think, this is EVERY month, for practically no effort.

[Kata]

Sometimes its as low as 3%, but that might be more because 3% of £2,000 per month isn't a bad racket.

They are all useless ******s who seam to do nothing but upset the tenant and the landlord when there is even the slightest issue, and when there isn't they don't have to do anything to justify their monies.

But they did 'find' you and I wouldn't be surprised if they have a contract that prevents you and your landlord cutting them out of the loop.

My balance of experience makes me rather agree with you; I have never actually dealt with a rental agency who have been any good. Unfortunately, if they handle the property you want, you're rather stuck with them! Buying/Selling agents however I've had decent experience with, as a result of asking around before choosing; when I come to rent my current place, I'll go with their letting department as I have a contact I can moan to if it all goes tits up!

As others have said, the contract is everything. Read that and work out exactly what your position is. It sounds like you have a good relationship with the landlord, so make sure you cultivate that and keep him on side!

[Moby-Dick]

Well I rented for 9 years in the same place - landlord decides to sell - Did he offer me a deal ? nope - after having 70 grand off me in that time he only offered me first refusal at what ever the highest estimate the pink shirted onanists gave him.

even if the landlord decides to sell to you , the agency still take a cut btw.

[Vini]

even if the landlord decides to sell to you , the agency still take a cut btw.

I'd imagine that he can cancel his contract with them well in advance though? no?

6 months down the line, he's not happy with the service, surely he can just jack them in, and we take it private?

Then later on we look at purchasing it...

The house we're in was 160k, then dropped to 140k last summer and didn't sell. They needed to sort something as they were moving away, so turned to renting which is where we stepped in (Aug 09).

I'm not sure what the market has done, but I'd like to think the house is still close to, if not lower than the 140k mark.

With or without a 'renting' deal, I'd like to think we could come to an agreement, but also understand that the landlord wouldn't take 130k if Joe Bloggs offers 160k etc... He's no ties whatsoever to us, other than the fact we're in his house.

[Saracen]

We currently rent via an agency, does anyone know what the average monthly % an agency will take before the landlord gets their cut?

.....

Also, what's a rough estimate of an agency selling fee? 2% or the like?

Fees charged by a letting agent will depend very much on what services the landlord uses the agent for. Typically, anything from abut 8% to 15%, though it can go higher.

It will often boil down to who does what. Do the agent merely find tenants and 'vet' them? Do they provide extensive or limited marketing facilities? Or are they offering a "full service" facility where the landlord is entirely hands-off.

Say a tap leaks or the boiler breaks down? Who sorts it out? It might be the landlord if he believes close-by, only has a small number of properties and has the ability to do it himself .... or is prepared to muck about hiring plumbers or boiler engineers ... or whatever. But if the landlord lives a long way away, it may be that the agency manages all that, and if they do, you'll pay for their time.

As for selling fees. again, it varies. It varies, obviously, on whether it's sole agency or not (because they're less likely to get anything if it isn't, so want a higher percentage). It also varies according to market conditions and the seller's negotiating skills. It's also worth remembering that if you drive the percentage down too hard, you lessen the agent's motivations to prioritise your property .... and perhaps, lessen their motivation to spend their advertising budget on your property.

Typically, around 1.5% to 2.5% for sole agency, and perhaps 3.5% for multi. Oh, plus VAT.

[Saracen]

Well I rented for 9 years in the same place - landlord decides to sell - Did he offer me a deal ? nope - after having 70 grand off me in that time he only offered me first refusal at what ever the highest estimate the pink shirted onanists gave him.

even if the landlord decides to sell to you , the agency still take a cut btw.

Well, to be honest, so would I, more or less.

Most landlords look at a property simply as a business. You buy a capital asset, earn income from it and then sell it .... hopefully, in the case of property, for more than you paid. It's not unknown for the object of the exercise to be capital growth, with the bulk of any rental income going to paying financing costs, agent's fees and maintenance and upkeep bills. The profit, in many cases, comes from the capital appreciation.

Were it me, I'd have wanted several valuations, and wanted to know both what the agent was going to market it at, andwhat they expected to actually achieve. And it's not uncommon for agents to vary, by up to 15%, in their valuations. So, I'd have looked at the expectations (not asking price), looked at land registry data in the area, etc, and evaluated what I expected to get. I'd then factor in not having to pay estate agent's commission if I sell privately.

I'd then balance that against anything I offered you, but it would bear in mind that while agents can be wrong on the high side, they can be wrong on the low side too, and might get more than an average of their valuations. Some agents have been known to value high to get the contract, while others have been known to value low to achieve a quick, easy effortless and relatively low-cost (to them) sale, and never minds that the vendor gets less than he could have. I'd give a tenant first refusal, but at a reasonable price, not a discounted one.

At the end of the day, if he cuts you a deal at below what he'd expect to get on the open market (taking fees, and VAT, into account), it comes out of his pocket.

Yes, he's had £70k off you in rent, but you've had 9 years of a roof over your head off him, and the odds are that if he hadn't had that £70k off you, he'd have had it off someone else, assuming it's the market rate.

If he should offer you a discount because he's had the rent, arguably you should offer him a bonus because you know the property (and presumably are happy to buy it or you wouldn't care what the price was because you wouldn't buy it), and because you're already settled, in, don't have to move, don't have the hassle, and don't have the costs of moving, finding new accommodation, etc.

In other words, it cuts both ways, but to him (probably), it's simply a business deal. To you, it's you home and much more emotive.

I'd rather sell to a sitting tenant (assuming they're a good tenant and I get on with them), but not if they expected me to dip into my profit margin to any great extent, and certainly not a few years ago when it was a seller's market. £5,000 off is still £5,000 out of my pocket, however you dress it up.

[Vini]

I've rented 4 properties, 2 private, 2 via agency. Both times with the agency were because the landlords had never let before...

And both times, I've always had direct contact with the landlord (which is quite rare I think), and I have always approached the landlord first if any problems have cropped up.

I've only experienced one problem whilst renting via agency, I found they sent the cheapest of the cheap service men to do the job and didn't actually complete the job to satisfaction. I simply called the landlord with whom I had a good relationship with (much as we do with our current landlord) and he kicked off at the agency who resolved it.

Because of this experience, I've always been keen to go direct to the landlord so that they're getting someone decent in to fix their property!

Another thing about the rent we're in now, is that the landlord has a service contract for the Gas. So even if something does go wrong, then I bypass the landlord and the agency and call the supplier, who send out their own chap.

With this being the case, I would imagine the agency love having my landlord on their books.

I think, from whats being said here, there's no harm in me mentioning going private/direct with us. If he likes the comfort of knowing that the agency will cover minor things, then maybe he'll not go for it.

... but maybe he'd prefer the extra bit that the agency are taking...

[Moby-Dick]

Sara the thing is that I know what the properties failings are and what you would need to spend on it to get it sellable for the value he wanted to sell it at ( without renovations - we're talking redecorate + new carpet throuhgout , replace all windows / refurb or replace 3 bathrooms and a kitchen )

when it sells for less than I offered him I will smile sweetly to myself. it did me a bit of a favour really as I needed to declutter quite badly

[TheAnimus]

But it is his right to be greedy, you might have a lower value estimation of the property because you know it better than the agent or a potential buyer would. As such he can get more for it!

Best of luck to him, you've also avoided buying a lemon because you know it has more flaws than the average bear.

[Saracen]

Sara the thing is that I know what the properties failings are and what you would need to spend on it to get it sellable for the value he wanted to sell it at ( without renovations - we're talking redecorate + new carpet throuhgout , replace all windows / refurb or replace 3 bathrooms and a kitchen )

when it sells for less than I offered him I will smile sweetly to myself. it did me a bit of a favour really as I needed to declutter quite badly

Oh, sure, if he's being a greedy twonk and comes unstuck, well, few things will be as satisfying as seeing it.

But a lot of buyers will see many of those things, if they've got any sense, too. I was after a house a year or so ago, and fifteen minutes told me it needed :-

- new windows throughout
- new boiler (existing in was circa 1970 and hadn't been used in 18 months, so I have doubts if it would have even worked
- boiler would also have had to be moved to comply with newer building regs
- decorating throughout, including every stitch of carpet
- new kitchen
- family bathroom completely renovated
- en-suite in guest room gutted and replaced.
- bathroom in master suite updated
- garage door frame replaced (rotten right through)
- new garage door, and it's a non-standard size
- flat roof over large garage checked and probably replaced (and from talking to the new owner, I was right about the replacement)
- plumbing check as I could see clear evidence of leaks in downstairs loo's water supply
- most eves boards replaced, and much guttering was suspicious

... and so on.

I estimated (back of envelope calculations) that I was looking at £50k (minimum) to do the work, if I was lucky, and perhaps more. The house was about £30k under market value (I know the area well, and a couple of people living in very similar houses in that street are friends anyway.

So my offer reflected what I could see needed doing ... and was rejected. I was worried about what might also need doing that I couldn't see.

Well, the house sold, well above my (subject to survey) offer. I've met the couple that bought it, and found out the nightmares they got when they did buy it. The first thing that happened was a major boiler problem and the thing was condemned. They actually spent about 3 weeks living in a relatives spare room because they weren't allowed in the house, due to the sate of the gas appliances. And it then cost them an absolute fortune, and well beyond my £50k minimum estimate.

But .... the vendor sold the house at that price. To my mind, the buyer messed up, and while now (18 months later), they are nearly finished (if a lot deeper in debt than they expected to be) they now have a very nice house in an absolutely great location, which was why I was particularly interested.

In my opinion, the place was not worth, compared to nearly identical neighbourly properties, what it sold for, but sell for that it did. No doubt, to the vendor's satisfaction. He could have taken my offer, but would have been much worse off, because a mug came along.