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Setting Up a Letting Agency - Comparing Letting Agency Fees
The second research sheet that we include is designed so that you can enter and compare local letting agents fees and commissions. These too can differ widely throughout the country. You'll need a general idea of the charging structure common to your area before you can decide on a basis for your own charges. This is an essential step in the research stage for anyone starting a letting agency business.
Letting agents fees and commissions can be made up of a variety of different charges, although not all agencies charge them all. Charges to landlords can include a letting fee, tenancy agreement fee, management commission, charges for inventory preparation, check-ins, check-outs, tenancy renewal, routine inspections, handling insurance claims and more. Charges to tenants may include a referencing fee, agency fee, charge for check-ins, check-outs, and tenancy renewal.
Sourcing the information
Existing letting agents: Using the list you have compiled under Listing local letting agents in Part 1 of this series of articles about local research, contact every letting agency in the area, including estate agents who deal with lettings. Visit as many as possible in person, and telephone others. Adopting the role of a potential landlord customer, ask some of them for written details of their services and fees.
Telephone several others under the guise of a potential tenant applicant, and enquire about the fees they charge to tenants.
Local newspapers: Check out the local newspapers and make a note of any info about fees and commission charges that letting agents have included in their ads.
Enter the information you acquire using the above procedures onto the Research Sheet – Average Local Rental Levels, which you will find in your Southcourt Letting Agency Business Package.
The information you learn about existing local letting agency fees and commissions will enable you to make realistic decisions about the fees you decide to charge in your own letting agency. This an essential exercise for anyone intending to
start a letting agency.
In Section 3 of our manual which deals with marketing strategies, we explain how, once you have the above information, you can if you wish manipulate your fees and charges so that they appear more competitive than other agents, without actually reducing your income at all.
Top tip: Don’t be tempted to drastically undercut other agents fees. Never pitch your charges to equal or beat the lowest in town. If your fees appear too low, landlords will be sceptical that you are able to provide an efficient service at such a low cost, or suspect that you are desperate for business.
Posted: October 2011
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