About the essence of the commission: what services have to be paid
For the fact that the intermediary assisted the tenant in renting housing, he receives a commission for his services - the so-called “commission”
. In fact, this is a reward for services that were actually provided to a person who needs to rent housing, that is, the selection of an apartment that completely suits the tenant. It is clear that if square meters are rented without intermediaries, there is no question of any commission fee.
When concluding contracts with a real estate company or a private realtor, clients pay for a certain list of services, which may have options depending on the principles of work and the level of the agency. The standard list includes:
- selection of housing options that best meet the customer’s needs;
- showing the property on site (often in serious agencies this is done by a realtor without the presence of the owner)
; - participation in negotiations with the owner, clarification of details;
- drawing up a contractual document and being present during the signing of all necessary papers.
The help of an experienced specialist can also consist of assessing all the advantages and disadvantages of the property, taking into account some important nuances that tenants often do not pay attention to, and checking the technical condition of the apartment. Responsible offices with a large database of apartments care about their reputation and do not strive to rent out the first housing they come across by hook or by crook. The agent’s task is to completely complete the job, which begins with the search for housing and ends with guaranteeing a clean transaction for the tenant.
In addition, good, successful realtors are masters of negotiations, which means, with a certain loyalty to clients, they can bargain with the owner by reducing the rent. The main thing is not to make a mistake when choosing an intermediary.
What does a real estate agency charge a commission for in a housing rental transaction?
It's no secret that all real estate agencies charge 100% of the monthly rent for their services. And it’s also no secret that almost all clients are unhappy with this (except for agents). Many consider this figure to be completely unreasonable. In this article we will try to tell you the whole mechanism of the agents’ work and describe all the incredible work that agents put in to ensure that you live calmly and for a long time in a rented apartment.
Let's start with where these notorious 100% come from. Why not a certain amount, for example 5 or 10 thousand rubles, because the work that the agent does is the same with all apartments. This is far from true.
Let's reflect and analyze all the realities of the current market (Russian). We come to the restaurant and look at the menu. What do we see? Is it written there the purchase price of drinks, and at the bottom the signature - “restaurant markup is 50 rubles.” Have you ever seen this? And when buying a used car on the market, the seller also has a markup of 50,000 rubles. for all cars? This is not so, and everyone understands this perfectly well.
Take any product, absolutely any, any service. This is at least dishonest. Why should a person who rents a room in a communal apartment with his last money pay the same amount as the daughter of an oligarch from Moscow pays? It's not fair. And realtors are trying to at least restore this justice. There must be equality. That is, the question of the advisability of paying interest, and not some fixed amount, has been removed.
Now let's talk about the number of these same percentages. Why 100??? We will not consider the fact that this is an international standard that has developed over many years to be an argument. Although in fact this is true. Let’s say 80-90% - if this is fundamentally important for you, then you can always ask a realtor you know for this discount. You can find an agency that provides such a discount. There is no question about this. Another option is 20-30%. Fine. So you contacted an agent and want to rent a room. He will not take a penny from you until he moves you in. As practice shows, the time spent searching for a room is 1-4 days. The average cost of a room in St. Petersburg, as of January 1, 2012, is 10,000 rubles. After 4 days, when he finally completes all the work assigned to him, he will receive 2,500 rubles. And this is in the best case, but otherwise, he may not receive this money, since the client changed his mind or rented a room through another agency. That is, you still need to take into account the risks that the agent takes when searching for a room. Now let's figure out where this money goes then.
The process of dividing money is not that simple. Firstly, most transactions take place with the participation of 2 agencies representing the interests of the tenant and the landlord. Profits are divided in half. Next, the agent gives part of this money to the agency for which he works, usually the agent retains about 50% (it all depends on the specific agency). It turns out 2500 rubles. If we take into account that the agent will work regularly, 5 days a week, and work with 2-3 clients simultaneously (as practice shows, this is approximately what happens), then in the end he will receive approximately 5,000 rubles a week, since not all clients will eventually rent their own homes. And the question immediately arises: who is ready to work for that kind of money? Who will then look for an apartment for you for less money? You can also calculate the costs of communication and travel. We will not do this, because everything is already clear.
This is not such easy money and it is not that big for an agent. Have you ever seen an agent driving a late model BMW to a showing? I think you yourself know the answer to this question.
The work you see is just the tip of the iceberg, only a small part of it. If you call an agent at 15:00, and at 19:00 he already shows you a room that you like, signs an agreement and takes money, this does not at all mean that he is a “grabber” and is making money off of you. And this means that a professional is working with you, who has saved a lot of your time and money. Isn't that what you pay for?
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Who should pay the commission?
The commission is an amount that is transferred to the realtor once, and, depending on the rules of the agency and the agreements reached, it is paid either by the landlord or the tenant.
However, this nuance should be clarified “on the shore”.
There is a tradition in the Russian real estate market according to which the commission fee becomes the lot of the tenant. True, this rule applies in cases where housing is rented, which is more likely to belong to the economy (now “standard”)
or comfort class; the commission for housing of a higher category is often paid by the owner.
As for luxury real estate with a significant rent, it is paid in the vast majority of cases by the owner of the property. However, in some cases a decision is made to split the commission fee between both parties to the transaction. There is another, simpler rule: the commission is paid by the one who contacted the real estate agents.
What should you know about the contribution amount?
Most often, the amount of the commission fee in favor of the intermediary is set in the amount of the monthly rent that was agreed upon.
But there may also be nuances here, so you should inquire about the principles for determining the commission at the stage of signing contractual documents with the agency and check that the corresponding clause appears in them with all the details. If, for example, two intermediary companies are searching for housing at once on the basis of a partnership agreement, they will subsequently divide the amount received.
Quite often the commission fee is half the transaction amount, and in some cases even lower. This commission is taken from people who have very little money, and they don’t spend much, trying to get a roof over their heads as quickly as possible. Such tenants simply do not “pull out” all the initial payments at the same time, while they agree to turn a blind eye to serious shortcomings in the apartments offered. Since there are not so few such clients, and there are quite a lot of housing in the databases that can suit them, realtors sometimes make such concessions.
The amount of the commission is greatly influenced by the liquidity of the proposed option.
The more profitable the property and the easier it is to rent it out, the higher the commission. If there is an apartment with an almost ideal price-quality ratio, you will most likely have to pay even a little more than the monthly rent to rent it.
Commission amount
What does a commission of 50 mean when renting an apartment?
This is a payment to a realtor or agent for work under an agency agreement, usually the fee varies from 50 to 100% of the monthly rent of the apartment.
The cost of intermediary services often depends on two factors:
- Number of agents involved in apartment selection . If an agent works together with a realtor from another agency, then they can request 100% of the amount of the apartment. They split the reward in half.
- Liquidity of living space . The more favorable the price-quality ratio of an apartment, the greater the demand for it, the higher the commission may be.
Read the article, illegally renting out an apartment without paying taxes, what this means for the owner, here.
How to pay commission when renting?
The procedure for making a commission payment is most often determined by an agreement between the employer and the real estate organization. An ordinary tenant, who is definitely not a VIP, will have to come to terms with the fact that the rules will be dictated by the agency, and if they are not suitable, he will have to look for another office.
It is important to remember that the commission fee is paid only after the tenancy agreement has been signed, the tenant has received the right to occupy the property, and the keys to all premises have been handed over to him.
Documentary confirmation of payment of the commission
(as well as the initial settlement with the owner or his legal representative)
must be obtained. In the future, it is recommended to save and monitor the safety of all documents confirming the facts of payment.
If the commission was paid “on good faith”, and then the owner of the property found reasons to quickly terminate the contract, you will simply have to say goodbye to the money.
If there is an agreement indicating the amount and a document where the transfer of funds is recorded, it is possible to demand the return of commissions from the company or a specific specialist, including in court. You should exercise extreme caution with private agents who are not ready for official relations.
I feel sorry for money: how to avoid commission?
The only way to avoid paying a commission is to rent an apartment without the participation of any intermediaries.
Realtors strictly respect their financial interests and will definitely require a commission fee. Finding housing that is rented out by the owner himself is quite difficult, and such work, unless you are lucky right away, requires a lot of effort.
Many tenants try to bypass realtors by obtaining the necessary information from the database, but without paying a commission fee. For example, you can try to conclude an agreement with a small agency, come to a meeting with the owner, inspect the apartment, and later, without an intermediary, meet with him again and finalize the deal directly.
It cannot be said that all homeowners happily agree to such options, since it is easier and safer for them to cooperate with trusted agencies. If you are going to resort to such deception, then it is better to send another person for inspection, and then, knowing the address, independently find and negotiate with the owner of the property.
It must be said that there are also a lot of risks in such cases; it is worth making sure that the owner is not a figurehead, and that everything that happens is not a well-thought-out scam. Many people have heard about situations where several tenants move into the same living space, and contracts are concluded with all of them, and a deposit is also taken. Then the owner appears, who, together with law enforcement officers, clears his home of “foreign elements.” In such cases, it is almost impossible to return the money, so to avoid such situations it would be much cheaper to simply pay a fee.
Ads monitoring. Interests of Landlords and Tenants
Many potential tenants, when looking for housing, often come across offers to rent out an apartment without an intermediary commission. Of course, it’s worth calling them, and it doesn’t hurt to give your “mirror” hiring advertisements either. However, you should not expect business communication exclusively with home owners. Indicating “no commission” may be a common marketing ploy, and this payment is called something else.
However, it happens that landlords need to rent out housing very quickly, and they are even ready to pay a commission fee themselves. And if there is a tenant in the ad who gives the impression of being a responsible and reliable person, then this will be just a gift. Thus, the best option may be to independently search for housing through advertisements while realtors select options.
However, not for every owner the absence of the need to pay for the services of realtors is an absolute bonus. For many owners, renting out housing has long been a business, and they enter into agreements with agencies on a range of services, so they prefer to be matched with a solvent tenant. In addition, such owners rarely want to spend time communicating with potential tenants.
Who should pay?
As a rule, when renting an apartment, the tenant pays the agent's fee, but this applies to living space in the middle and low price category.
The owner pays for the rental of luxury real estate, since finding a client for expensive apartments is often difficult. In addition, for many owners of expensive apartments, renting out is a business .
Sometimes the commission can be divided between two interested parties, the owner and the tenant, by mutual agreement.
We offer you a sample contract for the provision of real estate services for the search for residential premises for rent: .
Deposit and commission payment are not the same thing
Many “beginning” employers who do not have sufficient experience, trying to understand the details of financial relationships, confuse commission payment with a deposit when renting living space. It is worth remembering that the deposit is in no case paid to the intermediary, but rather to the owner of the property, playing the role of a financial guarantee of the tenant’s good faith.
When concluding a transaction, the owners, in most cases, insist on payment of payment for the first month of rent and for the last. But in fact, payment for the latter is not a contribution for the final month of the rental period. The amount can even go towards rent only if all established rules of residence were followed and the property remained safe and sound. However, depending on the terms of the lease agreement, this amount may be returned to the landlord upon eviction.
By obtaining a deposit, the landlord seeks to insure himself against possible losses associated with damage to property, non-payment of utilities and other misunderstandings. Neither real estate agencies nor their individual representatives receive interest on the collateral amount.
What is the commission and deposit when renting an apartment?
A commission is a fee that a client pays to a realtor when renting a home.
What is included in the agent's services?
- Search and selection of apartments that meet client requirements.
- Communication with apartment owners and establishing an agreement on viewings.
- Showing the apartment.
- Negotiations with the owner.
- Preparation and conclusion of an agreement between the owner of the living space and the tenant.
The agency commission is paid directly after the agreement is signed between the owner and the tenant. This amount is paid once.
In subsequent months, the tenant pays only the owner.
When looking for housing to rent, many people confuse the concepts of “commission” and “deposit”.
If the tenant pays a commission to the agent, then the deposit goes to the owner.
A deposit is not a mandatory condition when renting housing.
Often, owners insist that in addition to payment for the first month of residence, a person must also pay the amount for the last month.
Apartment owners want to protect themselves from unscrupulous tenants who may move out without warning. In addition, the deposit is a kind of insurance against damage to property by the tenant .
The amount of the deposit must be specified in the contract.
This will allow the tenant to return this money after eviction from the apartment if the landlord has no claims against him regarding the condition of the property.
