The tenant fee talk, upfront

A tenant asked me, at the third viewing, how much she was going to have to pay me. She had clearly been working up to it. She had also, I realised afterwards, spent two viewings not asking me anything else.

That is the cost of leaving it. It is not that people mind paying a fee. It is that until they know what it is, they are running a quiet calculation underneath every other conversation, and none of the useful questions get asked while that is going on.

So it goes in the first message now. Before the shortlist, before the viewing, in writing, whether or not anybody has asked.

What the fee actually is

Start with the part almost nobody is told: who pays the agent on a residential lease is convention, not law. There is no rule setting it. There is a way it is usually done, and it can be varied by agreement, and that is the whole of it.

The convention turns on two things — how much the rent is and how long the lease runs:

• The landlord pays their own agent. Almost always, on almost every let. If you are viewing a place I listed for a landlord, that is who is paying me, and the answer to your question is nothing.
• Above about $3,500 a month, on a two-year lease, the landlord usually pays the tenant’s agent too — commonly a month’s rent. It is a market that has decided the landlord competes for good tenants at that level, and this is one of the ways.
• Below that, or on a one-year lease, you usually pay your own agent — half a month is typical for a year, a month for two. This is where the misunderstanding lives, because a tenant who has rented above the line before assumes it is free everywhere.
• Everything else is yours regardless. The stamp duty on the lease is the tenant’s, by law rather than convention, and the deposit is normally one month’s rent for each year of the term. Neither is my fee and both surprise people more than my fee does.

Those are numbers, not principles. They can be argued about, and sometimes I argue about them on a tenant’s behalf. But they can only be argued about by somebody who knows them.

“Nobody has ever walked away over the fee. They walk away over finding out about it in week three.”

Why I say it first

A tenant who does not know how I am paid has to assume the worst about every recommendation I make. Why is she pushing the more expensive one. Why is she keen on this landlord. Is she working for me at all. None of that gets said out loud, and all of it changes what gets asked.

Say the number in the first message and the whole thing evaporates. You know what I get and where it comes from, so when I tell you the unit two floors down is better value you can weigh that on its own. It is the same reason I put my own incentive on the table when I am talking somebody out of a purchase: an adviser who claims to have no stake is asking you to trust them about something big by lying about something small.

What it cost, and what it gained

It costs me a small number of enquiries that stop at the first reply. That is real, and for a while it looked like a mistake — a message that ends in a figure gets fewer answers than one that ends in a question.

What it gained is everything after that. The people who do reply have already decided the fee is fine, so the first viewing is about the flat. Last year my average was somewhere over five viewings to a signed tenancy agreement. It is under three now. The shortlists are shorter because the conversation about budget happens honestly at the start, when the total is on the table rather than the rent alone.

I am not going to pretend that is a clean experiment. Rates moved, stock moved, I got better. But five to three is a large enough gap that I stopped worrying about which part of it was me.

The one thing that is a rule

All of the above is convention. This one is not: I cannot represent you and your landlord in the same transaction. Dual representation is prohibited, and it is prohibited for the obvious reason — the two of you want opposite things about the price, and one person cannot argue both sides of that in good faith.

In practice it means that if you walk into a viewing of a unit I listed, I am the landlord’s agent that day. I will tell you the truth about the flat, I will not waste your Saturday, and I will not be negotiating on your behalf, because I am not allowed to and because you would not want the version of me that pretended to.

That is worth knowing before you tell me what your ceiling is. Plenty of tenants tell an agent their real number at the first viewing without ever asking whose side that agent is on.

What I actually send

It is four lines. What the rent is, whether there is a fee to you and how much, what the deposit and the stamp duty come to, and who I am acting for. Then the viewing times.

It has never once started an argument. It has ended a few conversations early, which turns out to be the same thing as saving both of us three Saturdays.

— MG

UnapprovedMichele did not write this post. It was written to the card copy that already existed, to give the template something real to render, and the date on it is invented too. Read it as a shape to correct.