use realtor to find tenants

19 Replies

occasionally I have seen realtor signs on a house and it says "For Rent".   Even with flyers in the box.

Assuming the property does not belong to the realtor and he is helping a client find a tenant,

Can you please explain how exactly this process work?   Pros and Cons? 

In Texas (not sure about California) the realtor lists the homes on MLS, handles tenant screenings, showings etc. Typically the charge is equal to one month's rent. Often by listing on MLS you get more applicants to choose from and sometimes better quality applicants (especially when it it a corporate transfer etc.) Not all realtors handle leases here in Texas.

Originally posted by @Larry P. :

In Texas (not sure about California) the realtor lists the homes on MLS, handles tenant screenings, showings etc. Typically the charge is equal to one month's rent. Often by listing on MLS you get more applicants to choose from and sometimes better quality applicants (especially when it it a corporate transfer etc.) Not all realtors handle leases here in Texas.

Bingo. MLS listing depends a lot on the area, but the rest of the expectations are the same. I have realtors manage all of my leasing in both North Carolina and New York. In NC, I pay a fee of 1 months rent for placing a tenant. In NY, some of my properties I pay a 1 month fee, others the tenant pays the fee (but that's a market-dependent NYC thing).

I've heard that it's more common in higher rent areas since the Realtor gets a portion (or all) of the first month's rent, and, for example in New York, they can do a few of those a day. Larry's advice about the MLS and especially the corporate transfers makes sense. Probably more of a niche for higher income areas/properties.

I didn't know you can search the MLS for rentals, or that people do that instead of craigslist!

OK, let's say it is a one time fee of one month's rent to the realtor, assuming I manage it myself, that's still 1/12 out of pocket expense (8%) if the tenant moves after a year.    (4%) if they happens to live there for 2 years.    Can I say this is not such a good deal since I am still managing myself after the realtor find me a tenant?  How much does managing company charge, would they handle everything at 8% for the year?

Will tenants who browse MLS or find their way through my realtor be a better quality applicants? Possibly...

This is purely a question of what works best in your area.   @Larry P. indicated that the MLS works well in Texas. As we know, Texas is a BIG state and in my experience using the MLS tends to work best only in big cities. Big cities will have agents that only do leasing(Smaller towns they would starve !) and using avenues such as Craigslist your listing tends to get buried in a matter of minutes

In smaller towns, I have found join the town Facebook page to work the best along with Postlets and Craigslist if the town is relatively close to a major area

I live in Fort Worth Texas and I helped a guy in California with a couple of houses he bought here and he used a realtor to find tenants. From that experience I would never consider using a realtor to find tenants. It was terrible. 

If you think about it realtors and landlords are completely at odds with each other except for when the landlord is buying a house. Rent houses lower the property value of a neighborhood and realtors make 3% of the sale price for selling a house (in Texas) and they make half a months rent for finding a tenant. They make that half a months rent no matter how messed up the tenant is too.

So I am not saying what YOU should do but I will never use a realtor to find a tenant.

It depends on where your property is and if you are inclined to DIY or leverage your time and money. In the New York market, landlords and agents work together on most leases. Landlords give an agent an exclusive or allow multiple agents to list their property.  Agents do all the marketing, qualifying, showing, credit check, etc. The agent submits a completed application with proof of employment, finances, credit check, etc to the landlord for approval of the applicant. Landlord decides who will be the new tenant.

The fee is typically 15% of the first years rent and is paid by the tenant. 

we strictly use MLS to find our tenants.

we tell our agent "house is ready, go and list it". she lists, fields calls, gets applications, we screen, meet the clients, ask question. 

her and the other agent (if there is another agent) split the first month's rent.

i'd never do it any other way.

We have a rental house in North MS. I have a friend that is a realtor and she will post our rental on the MLS for me. Realtors show the house, but we do all the screening, application, etc. The going rate for a referral fee is $100 in our area. We pay $200. It's a minimal fee to pay and find that realtors bring a better quality tenant. We do our own advertising as well, but have had better luck working with a realtor.

Originally posted by @Steve Babiak :

Seems that most previous posts don't recognize the incentive structure for realtor tenant placement isn't aligned with best outcome for landlord; I've given my opinion of this elsewhere on BP already:

http://www.biggerpockets.com/forums/52/topics/8298...

http://www.biggerpockets.com/forums/12/topics/1777...

http://www.biggerpockets.com/forums/52/topics/1565...

steve, i agree with you... but in our case, we turn most applicants down. the agent does NOT pull credit, the agent does NOT review applications. she simply acts as an assistant and we do all the work and decision. the agent has no say in what we do and who we pick.

there's no way i can:

1. get the quality of the tenants if i use other services like postlets and CL

2. answer or CARE to answer 100 calls/questions during the day since i have a day job

3. talk to upset people telling them they didn't get the house

4. keep track of who paid for application and who is owed money cause they didn't get the house.

there are at least 10 other good reasons..

@George P. - it sounds like you just use the agent and MLS for advertising purposes; many (wannabe) landlords with whom I have spoken want the agent to manage the entire tenant selection process (including screening and background checks) - these are the ones that my post is attempting to educate.

In 8 years, I've only used a realtor once to find a tenant, and it was my own fault for incorrectly pricing the rental. I did that based on the opinion of a long term resident of the complex who knew several renters there. It's a higher end unit, and had I correctly priced it myself from the start, it would have rented quickly, as it did once I finally lowered the rent to the sweet spot.

I eventually used a realtor to find a tenant, and the first applicant they brought (through another realtor) had a theft charge on their background check. As noted, realtors don't always do background checks...at most, they pull credit. The second applicant was a self employed massage therapist who only received personal checks when she worked, claimed to pay her rent in cash (no paper trail), and had a current landlord that never returned my calls. Eventually, a great tenant did appear by way of another realtor, and my realtor had to split that one month commission with him. Realtors will not be dealing with the tenant once they move in.

Given the amount of work I had to do anyway, I don't plan to use a realtor again. I handle the phone calls and do pre-screening/verification, I pay my contractor to show the units to potential tenants at $20 a showing and the tenants pay for the background check. Craigslist, Postlets (and everywhere Postlets syndicates my ad), word of mouth - works much better than giving up a month's rent.

Originally posted by @Steve Babiak :

@George P. - it sounds like you just use the agent and MLS for advertising purposes; many (wannabe) landlords with whom I have spoken want the agent to manage the entire tenant selection process (including screening and background checks) - these are the ones that my post is attempting to educate.

yes, that's correct. MLS clients/tenants are at least 15x better than the rest of the applicants/tire kickers.

i have lawyers, physicians, supervisors that make 100k+ in our houses. they'd NEVER use CL or postlets and waste their time looking for a house.

I am a realtor in Illinois and do property management of rentals I have an ownership interest in. There was a while that it was easier to find quality tenants via using realtors. Now we get some that way, some via Craigslist/Hotpads etc.

The realtor you hire posts the house in MLS. It should auto feed to the some of the other websites NOT including Craigslist, in my experience the single families don't show up as single families on the other websites anyway so I end up manually entering into websites. If the listing agent you hire finds a tenant themselves, they and their broker they work for get the entire commission. If another agent brings the tenant, there is some sort of commission split between the brokerages which should be outlined in the agreement you have with them. I would be very cautious in allowing them to screen for you, since it's your butt on the line when you wind up with a deadbeat tenant and their only incentive is to find you a live body and get it rented quick to get paid, they are not incented to find a good tenant.

Usually when a place first shows up in MLS I will immediately get calls from the agents who have clients they can't place anywhere because they have issues that make them undesirable to landlords and ask if I can make exceptions, and they try to tell me how nice their clients are etc., to which I tell them if they meet the criteria attached to the listing in MLS there should be no issues and with Fair Housing Laws being what they are we can't make exceptions. Just be sure to double check the work the agent does yourself, the pictures in the listing, the amenities they said were included, that it actually winds up on the websites they say it will; the agents who do rentals are not the top agents because the compensation is a LOT lower than selling houses.

Originally posted by @Kimberly H. :

I am a realtor in Illinois and do property management of rentals I have an ownership interest in. There was a while that it was easier to find quality tenants via using realtors. Now we get some that way, some via Craigslist/Hotpads etc.

The realtor you hire posts the house in MLS. It should auto feed to the some of the other websites NOT including Craigslist, in my experience the single families don't show up as single families on the other websites anyway so I end up manually entering into websites. ...

Thanks for your reply and everyone else, it is clear what the realtors duty is..

So without using a realtor, can you recommend any sites for me to advertise my property other than craigslist?

If you use Postlets, I pushes the listings to a bunch of sites and I think still assists by giving html for posting on Craigslist. Just keep in mind it can take a day or two for them to get pushed.

@

Steve Babiak

Ditto

Ditto

Ditto

In Texas they charge a half months rent. Look at it like this. They make 3% on a sale. On a $100,000 house (which is low end really) they make 3 grand. In reality they might make more like 6 grand. Plus rental houses lower the property value of the neighborhood (in my personal opinion I have no proof of this). To me the incentive seems to be to not put much effort into rentals for a realtor.

BTW Personally, and now this is just me, I hate craigs list too. The very best tenants I have ever found I got from a sign in the yard only. I realize this doesn't always work. I put up the sign and wait about a week before I advertise. The people who drive by and see the sign are locals. They already have ties to the neighborhood. They care more about the neighborhood then somebody who reads an ad from across town.

When I advertise I use RentalHouses.com. The price isn't too bad and they list your house everywhere including craigs list (unfortunately). It is tax deductible too.

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