Stupid Real Estate Management Fees

FareEvader on 11/11/2019 - 17:00

Greetings,

Let me start by saying that I understand that fees are how real estate agencies make money, but this is OzBargain, so I don't want to pay more than I need to.

I recently bought a commercial property as an investment and contacted a real estate agent to to manage it for me, which we agreed on at x% per month.

However, there is a fee that is really bugging me, a 2.5% "reletting fee". It's basically when the current tenant's lease expires and they wish to continue renting. Can I get out of paying this? It's not like they need to do much work to resign an existing tenant.

I'm wondering if anyone has any experience with real estate agents and their fees and how to get out of paying them (if reasonable and possible). I'm not trying to get something for nothing, I'd be happy to pay a relisting fee for a new lease for a new client.

Financial

Comments

  • wizzy on 11/11/2019 - 17:06
    +7

    Management fees are often negotiable. It is helpful to negotiate these fees before signing a management agreement. If you are not happy with your current agent you can try negotiating now. Otherwise you can search around for a new agent with a different fee structure, or one who will negotiate a different fee structure, and change agents. Changing agents is not difficult.

  • MITM on 11/11/2019 - 17:30
    +1

    Name checks out.
    2.5% of what ? The monthly lease amount - the total lease payable.
    The agent will start investigating 3-6 months before the end of the lease if they are going to renew. They'll have the paperwork ready for signing prior to the end of the current lease.

    • FareEvader on 11/11/2019 - 21:40

      Hmm I didn't think about this, cheers

  • HighAndDry on 11/11/2019 - 18:53

    It's not like they need to do much work to resign an existing tenant.

    Depends on a lot of things - which the agent is being to paid to know about and deal with. The quality of that service I can't vouch for, but there can be a lot involved or just to keep in mind.

  • Ocker on 11/11/2019 - 19:08
    +2

    Being commercial probably it is a 5 year (or so) lease and you want to bitch about a 2.5% fee for doing all of the legal legwork etc to renew the a lease. Obviously OP did not do the homework about costs of owning an investment property, and now complains?

    • FareEvader on 11/11/2019 - 21:41
      -2

      If I can save a buck or more, why not? This is what OzBargain is for

  • Soluble on 11/11/2019 - 19:36
    +3

    2.5% is pretty much the standard reletting fee, to get a new tenant is usually around 5%. You're paying the fee for them to re negotiate a new lease.

    2.5% of the annual rent for anyone wondering

  • netjock on 11/11/2019 - 20:23
    +1

    Depends on what they are for you and depends on how much you are talking about. If it was $1m property and the lease was $80k pa I'd say there is room to negotiate.

    If it is 2.5% on $16k you're just making yourself look like a fool. Especially if it is a long lease.

    • FareEvader on 11/11/2019 - 21:41
      -1

      2.5% on $150K, a bit much for reletting…

      • netjock on 11/11/2019 - 21:50

        If you bought a $2m property then you can afford to pay for someone to drive it down for you but then that is too much.

  • AbsX on 11/11/2019 - 23:03

    OPs username checks out

  • tsunamisurfer on 11/11/2019 - 23:08
    +3

    OP signs the agreement then goes to Ozbargain to complain about it's terms.

    How is it possible these people have the financial capacity to own commercial property?

    • FareEvader on 12/11/2019 - 10:18
      -2

      Haven't signed anything yet buddy

  • singlemalt72 on 12/11/2019 - 10:05

    oops - wrong thread

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