A.D. Cantelmo Property Management
Our Business is Property Management in Orange County California
How Much commission should I pay to rent my home?
We all need to make money
Years ago when I owned an Italian Delicatessen, I had a
customer who told me about a loaf of bread she loved, but she could not drive
to Fashion Island in Newport Beach anymore and she missed the Bread. She asked
me, if I ever was at Fashion Island if I could pick her up one and she would
pay me. One day I was in Newport and I did pick her up the Bread. I called her
and she came in to pick it up, but she was upset that I had added a small
increase in the normal price that she paid for the bread. She did not
understand that I was in business to make money.
The moral of the story
I tell that story about the bread to make a point when
people ask me about what commission they should pay. Of course the commission
that a person pays their Broker is up to them and their Broker, but the number
of people who will see their property depends greatly on the amount of
commission they are willing to offer. And of course the more people that see
the property, the better chance of a positive outcome.
So many people are not
clear on what the commission they pay to rent or sell their home really buys
them. I have had conversations with people who get very upset that their Broker
is not bringing people to see their property and I explain to them that they
are not paying their Broker a commission to show their property, they are paying
their Broker to make sure that the property is shown by every realtor that has
a potential client. In order for that to happen, the Broker needs to have
enough commission paid so they can offer on the MLS (Multiple Listing Service) a large enough commission
to incentivize their fellow Realtors to show the property and also make money
themselves. If just like the bread lady, you expect others to give you service
without profit, then you will not get the outcome you are looking for.
Back to the original question
So let’s get back to the original question before I went on about
bread, how much should a Landlord pay in commission to get their property
rented? When it comes to leases, we have to start by saying that there is not
much money to be made by the Brokers in the first place, so what is offered on
the MLS can be very tricky. The listing Broker has a dilemma, because the
normal commission for a lease is ½ of one month’s rent, so if your property
rents for $2000.00 then you would pay $1000.00 in commission. If Your Broker
has to split that commission with another Broker then you can see that neither
party is getting rich on the transaction. In fact most Realtors will not show
rental property, so you need to make sure that the few that do are willing to
show your property.
Without getting into the nitty gritty of what goes on with
many lease listings on the MLS, if your Broker is willing to split the
commission 50/50 then you should get a good amount of Realtors showing your
property, because unfortunately, many Brokers will try and short change the
offerings on the MLS to try and keep as much of that commission for themselves
as they possibly can. In my property
Management business, I have had Realtors say how surprised they were that I was
offering as much commission as I was, because I always offer a 50/50 spit.
Offer an incentive and be surprised
If you as a Landlord understand the dilemma your Broker is
in and you want to make sure your property is well represented on the MLS,
then you may want to offer an incentive to Realtors who bring a qualified Tenant
to your property. You would be surprised at what an extra $200.00 can mean on a
lease listing. Remember that you are looking for as many well qualified showings as possible and if that takes some incentive on your part then it may be well worth it.
Getting back to the
bread lady from my past, if she was willing to pay me that little extra for the
bread, I would have been happy to bring her the bread every time I was near
Fashion Island, but since she did not feel my service was worth anything then
she got what she deserved, Nothing!
A.D. Cantelmo Property
Management Specializes in Property Management in Orange County
Ca.