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We're considering renting our home using a realtor and their management company and I have a couple questions regarding commission and tenant credit rating.
First, as written, the realtor get's 1/12 of my annual rent as commission for a 12 month lease, which is fine for a one year lease. The part that bothers me is that if the tenant wants to renew, extend or even sign a multi year lease, the realtor would get a commission each and every year for doing little to nothing?!?! Is this common and is this negotiable?
Here's what the agreement says.
------------------------------------------------------------------------------------------ Compensation. Broker shall be compensated by Owner on the following basis:
A. For Leasing. Upon receipt of the first month's rent for any lease executed during the term of this Agreement, Owner shall pay Broker a commission fee of equal to 1/12 of the total rents expected to be paid by the tenant during the initial term of the lease. Should initial term be for more than twelve months owner shall have the option to amend listing agreement to pay the first twelve months commission at signing of the lease and the remainder of the commission on each anniversary date thereafter. UPON LEASE EXTENSION, RENEGOTIATION OR RENEWAL, OWNER SHALL PAY BROKER A COMMISSION EQUAL TO 1/12 OF THE TOTAL RENTS EXPECTED TO BE PAID BY THE TENANT DURING THE EXTENSION, RENEGOTIATED OR RENEWAL TERM OF THE LEASE. Broker shall have no obligation to share said commision with any cooperating broker.
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*Term is defined in agreement as no more than 12 months nor less than 12 months.
And on top of the broker commission, the management company gets 8% per month for their services, which appears to be the norm in the Industry?
Finally, nowhere in this agreement does it state that the tenant must have a minimum credit rating of x. Would it be reasonable for me to ask them to add a stipulation clearly stating that any prospective tenant must have a minimum credit rating of 700 to lease the home?
Thank you!
Last edited by flamadiddle; 05-02-2017 at 08:17 AM..
While I agree with selling and not renting, the contractual terms are for both parties to negotiate. If you only want to pay for the initial term, tell the agent that is your position. My guess is that they (or another agent) will accept those terms.
If you want minimal credit ratings for tenants, put it in there. But, what I would recommend is that the contract states that you must approve all tenants, and must be presented with the credit rating.
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