INSPIRED BY A POST THIS A.M. REPRIMANDING AGENTS FOR NOT TAKING A RENTAL REFERRAL.
NO APOLIGIES: I am a real estate broker/owner of a "for profit" company. I am not a public service organization with a government grant. I have many years of experience. I prioritize my business focus based on the market and profitibility. There is no profit in rentals. Rentals are a "LOSS LEADER" offered by listing companies.
The problem is not that most agents who have any experience or business do not want to handle rentals. The problem is that they are asked to handle rentals. By asking an agent to do rentals, you are asking an agent to lose money, lose time and lose opportunity.
RENTALS DON'T PAY ENOUGH. The average co-op for handling a rental in my area is 1/4 of one month's rent. If the average rent is $2,000 (it's actually $1,922), that means that there is likely to be a $500 fee. If the agent has a broker split, it could be a $250 fee to the agent. If there is a referral fee, the agent handling the rental could see a final fee of about $165. In today's economy, that is not gas money.
RENTAL FEES DON'T COMPENSATE FOR THE RISK INVOLVED IN WALKING OUT YOUR DOOR IN THE A.M. Don't forget, rental clients can take 2-3 days or more to find a suitable property. If the client has a pet, it may be harder. We do have large brokerages in my area that have huge rental management departments. I refer rental calls to that office and advise the caller to go into the office. I'm not looking for a referral fee. I do not refer rental customers, with the exception of one agent who said he wants them for his team. There have been times, however, when he's not been able to accommodate a home buyer customer. I wonder if any of his team was tied up with a rental?????
AGENTS ARE NOT INDENTURED. I don't understand the theory that just because one must have a real estate license to handle rentals, that a real estate licensee must handle rentals. I was furious when our MLS merged the rental database with the homes for sale database. Fact is, our MLS has no interest in our profitability. I do. Not just my profitability, the profitability of all agents in my network is important. I recall contacting an agent to refer a $400,000 home buyer for the coming weekend and she was not available because she was busy showing rentals. She sacrificed the potential of a $12,000 gross fee for the potential of a $500 gross fee.
I WANT MY REFERRAL AGENTS TO EARN A GOOD INCOME. There is no money in rentals. I don't want my agent partners tied up with rentals. I want them to focus on buyers.
Does Nordstrom have to sell KEDs just because they offer Ferragamo?
We are in business and we have the right to determine what services we offer.
LISTING OFFICES CAN HANDLE RENTALS. Let rental customers work with offices that have agents that specialize in rentals. Most offices have agents who will gladly work with rental customers. These are agents who need experience. They have no active buyer clients.
LESSONS LEARNED THE HARD WAY. I handled my share of rentals in my early years of real estate practice. I know how time consuming they can be. I also know that it is the agent that bears the responsibility for the costs involved. Time is a cost to anyone in business. When I was with a mega brokerage, I had to take rental referrals from the relocation department in order to get the relocating home buyers. That was an accommodation I had to make. Later, when I generated sufficient business, I stopped taking both relocating rentals and relocating buyers. The 30-35% net fee to the agent didn't make sense. It still doesn't.
Another lesson learned the hard way is that few rental clients become buyers. I have the stats and annecdotes cannot dispute that there are buyers and there are renters. They are rarely the same people. If a relocating client says that they want to rent for a year and then find a house to buy, fine. We have no way of knowing if that statement is true. Nor do we know that they won't meet many real estate agents at their new job, new church, new PTA, new block, new school, new grocery store, etc. You can rent to a relocating family, but you can't live with them. I've sold many homes to folks who came to town a year ago and decided to rent for a year with another agent. They contacted me from my web site when they were ready to buy. They didn't contact the agent who handled their rental. Of course, if their new boss's wife is a real estate agent. . . . . . . .
Don't forget, you are at the same risk with a rental client as with a buying client.
Don't forget, the rental customer can walk into a local apartment building that doesn't co-op and rent.
Don't forget, many rental customers are renting because their credit doesn't qualify them to buy. They don't realize that good credit is required to rent through real estate offices too.
Don't forget, if Lenn contacts you with a $1,000,000 home buyer who is coming in town next week to find a home to buy and you're tied up with a rental customer, your business sense, your common sense and, indeed, your sanity will be questioned.
WHAT IS YOUR MARKETING NICHE?? Identify your niche, model, focus, market and go for it.
All things considered, I'd rather go fishing.
THE EXCEPTION TO ALL OF THE ABOVE is a buyer who needs a rental while their home is under construction or awaiting settlement. Of course, we help them find a rental. Even Lenn does that and if the lease is up before the house is finished, just bring them home.
UPDATE: The member who inspired this post just reminded me that she did not try to "shame" anyone into handling the rental referral, nor was she seeking a referral fee. She's right. In fact, a second reading of her post makes me think I did her a disservice. So, at this point, I'd link to it and everyone can enjoy a post that has some much needed humor. However, it's MEMBERS ONLY. An enterprising ActiveRain member can find Kara's post.
Actually, the real message in Kara's post is the difficulty of reaching out to agents and actually getting one on the phone. Shucks, I've had that problem with $1,000,000 referrals.
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Buyers Agents in Maryland and Northern Virginia
New Homes in Frederick County MD
Lenn Harley — Search Listing in Maryland and Northern Virginia
Posted by 
Lenn,
No one really likes doing rentals but in this market I see more and more agents taking them...I've actually made some good income from them over the years...I actually got a fairly easy one right her on AR without having to pay a referral fee..the member didn't want to deal with it and I offered but they refused...the only problem is the other agent doesn't seem to care much about the process for their clients so I'm stuck doing the work. But that's pretty normal since they don't do the work in a sale either. I won't take anything under 1,500 and no seasonals under 4 months at 2000 a month...thankfully all have been within a 5 mile radius..but survival in this market has made many top producing agent do more of them to stay in the biz. They can definitely be a hassle but I'm ok with them in most cases.