Fees For Renting Out Property - Lawyer Or Agent?

[hentamkings 0]

Hi,

If you have a private residential property that you are renting out, would you prefer to use the service of a property agent (to settle the whole arrangement) or would you engage a lawyer (to settle the documentation and legal stuff, while you have to find the tenant yourself)? and why?

Does anyone have an idea of the fees/cost/commission if you use (for the above):

i. property agent; or

ii. lawyer.

[MetalTab 3]

for rental, it's not difficult to draft the Tenancy Agreement and have it signed between landlord and tenant. And then have it stamped.

I really don't see why we must employ an agent for rental... of course the agents have access to rental units/houses and also pool of prospective tenants. If you give yourself a bit of time, and price your unit reasonably, you should have no problems getting tenants.

The other thing is to assess how reliable the tenant is (as you will want to avoid all the fuss of having to deal with late/non-rental payments; or fixing broken items etc etc).

Give it a go, advertise it and gauge the response; do it yourself and you can save half month or a full month's worth of rent (depending on whether lease is one or two years).

Good luck!

[hentamkings 0]

Well you can use both service if you want the fee for a poperty agent depends on how big the land is and your negotiation on the percentage they could get. The lawyer would be needed to arrange the legal documents you need, usually the fee depends on how famous the lawyer is.

Hi karenmcgraw,

thank you for pointing out another option possible.

in option a, I understand that if you appoint an agent for this transaction, he/she will handle everything from sourcing of tenant, use the agreement (from CEA) and then execute it. The tenant would then have to get pay the stamp duties for it.

in option b of using the lawyer, im cutting off the agent totally. so I would have to source for tenant, show them. after agreeing, I have to get my lawyer to prepare the agreement. thereafter both tenant and owner go to the lawyer office to sign it. and again tenant have to pay the stamp duties (if im not wrong).

for option a, i understand (i may be wrong) that the agent would charge me 0.5 to 1 month of rental as their commission. So i am trying to see if using option b is more financially prudent. like for example, using a lawyer for the sale of private property is usually about $2-$3k.

Please share your thoughts if you could. thank you.

[delirious_jeff 0]

Neither, DIY the rental.

Tenancy agreement, you can find various samples yourself on the internet. If you are not comfortable about drafting the TA, you can hire a lawyer who shall probably pull one from a existing template. Bear in mind, the tenant may want to make some changes to the terms and conditions of the TA.

You can obtain past rental data of the apartments/condo from www.URA.gov.sg. This will aid you in deciding how much you want to rent out the unit.

The reasons why I chose to DIY.

1) When bad things happen, property salesperson is never around. Once they paid, they vanish till a year or two later just before the TA expires.

2) Lawyer services are not cheap.

One advice: take the security deposit and 1st month rental in cash!

[vinaip 1]

Use an agent. Lawyers only give safe advice.

Edited February 7, 2012 by vinaip

[propertysoul 0]

I would definitely engage the service of a "professional" property agent every time I rent out my properties, for the following reasons:

1) Why waste the time to advertise and show houses, or take the risk of showing strangers around, when a professional can do it for you?

2) Your tenant (especially for company lease) is mostly likely represented by his/her own agent. You need to pay your tenant's agent commission anyway. So why not pay your own agent who represents "your" interests? (P.S. For rental above S$2,500 per month, tenants do not need to pay commission to their agent. But the owner has to do so.)

3) My agent will advertise, screen tenants, arrange viewings, check tenant's background, draft Tenancy Agreement, arrange handover, get TA stamped and tenant's passport copy filed for me. After my place rented out, my agent also liaise with tenant, arrange repairs, chase rental/late payment charges, arrange renewal/replacement before end of tenancy, etc. All these services are paid with only one month's rent for a 2-year lease, why save?

I tried to rent out my first property the first time on my own. I never wanted to do it again.

The key is to find a good property agent. You may like to read about my experiences in my post at http://propertysoul.com/2010/10/08/in-search-of-good-property-agents/

Edited February 7, 2012 by propertysoul

[GoalHome 1]

I had used agents as well as DIY rental.

For using agents, they were ok but most disappeared after contract is signed and will only reappear 2 years later when the lease is due for renewal.

My most recent rental I decided to DIY. Advertised stating no owner commission, and had many agents approaching me. In the end, chose to work with a few. Specify type of tenants preferred. Expat tenant found in 2 weeks after only a few viewings, so not that much of a hassle.

Tenancy Agreement drafted by my lawyer. TA stamping and tenants' verification can now be done all online.

[hentamkings 0]

I had used agents as well as DIY rental.

For using agents, they were ok but most disappeared after contract is signed and will only reappear 2 years later when the lease is due for renewal.

My most recent rental I decided to DIY. Advertised stating no owner commission, and had many agents approaching me. In the end, chose to work with a few. Specify type of tenants preferred. Expat tenant found in 2 weeks after only a few viewings, so not that much of a hassle.

Tenancy Agreement drafted by my lawyer. TA stamping and tenants' verification can now be done all online.

Hi GoalHome,

Thank you for sharing. I heard of alot of stories about agents disappearing. I guess thats why CEA was finally set up in the end.

When you did it DIY, do you mind sharing the lawyer cost for it? Thank you.

[hentamkings 0]

I would definitely engage the service of a "professional" property agent every time I rent out my properties, for the following reasons:

1) Why waste the time to advertise and show houses, or take the risk of showing strangers around, when a professional can do it for you?

2) Your tenant (especially for company lease) is mostly likely represented by his/her own agent. You need to pay your tenant's agent commission anyway. So why not pay your own agent who represents "your" interests? (P.S. For rental above S$2,500 per month, tenants do not need to pay commission to their agent. But the owner has to do so.)

3) My agent will advertise, screen tenants, arrange viewings, check tenant's background, draft Tenancy Agreement, arrange handover, get TA stamped and tenant's passport copy filed for me. After my place rented out, my agent also liaise with tenant, arrange repairs, chase rental/late payment charges, arrange renewal/replacement before end of tenancy, etc. All these services are paid with only one month's rent for a 2-year lease, why save?

I tried to rent out my first property the first time on my own. I never wanted to do it again.

The key is to find a good property agent. You may like to read about my experiences in my post at http://propertysoul.com/2010/10/08/in-search-of-good-property-agents/

Hi propertysoul,

Thank you for sharing. I read through your blog and there are defintely things to learn from there.

for a case when you have an agent to assist you in finding a tenant and the tenant has a agent as well, do you have to pay commission to both your agent and the tenant agent?

I think most of the people do not mind getting an agent (and paying what is due) to get the tenant considering the hassle and time involved. But I think many has met agents who are less than professional or responsible and thats why some prefer to DIY. From your sharing and your blog, you seem to have find a nice agent who is thorough and look after your interests. If you do not mind, would you be able to share the contacts of your agent?

[GoalHome 1]

Hi GoalHome,

Thank you for sharing. I heard of alot of stories about agents disappearing. I guess thats why CEA was finally set up in the end.

When you did it DIY, do you mind sharing the lawyer cost for it? Thank you.

Hi hentamkings, the lawyer cost for TA is $1k. May get slightly lower fees from those firms that does lots of TA. Still cheaper as compared to estate agent's commission. You can try DIY, will get lots of agents calling you. For my case, it became too much to handle and I chose to work with the selected few. These are IMO the agents with better service. True enough, the agent that sealed the deal was very helpful and helped with lots of other work like admin stuff and helping me to get the place ready for the tenant move in.

[propertysoul 0]

Hi propertysoul,

Thank you for sharing. I read through your blog and there are defintely things to learn from there.

for a case when you have an agent to assist you in finding a tenant and the tenant has a agent as well, do you have to pay commission to both your agent and the tenant agent?

I think most of the people do not mind getting an agent (and paying what is due) to get the tenant considering the hassle and time involved. But I think many has met agents who are less than professional or responsible and thats why some prefer to DIY. From your sharing and your blog, you seem to have find a nice agent who is thorough and look after your interests. If you do not mind, would you be able to share the contacts of your agent?

In a co-broke case, you only pay your own agent commission and he/she will split it with the tenant's agent. My agent doesn't mind co-broke (i.e. earning half of the commission) if it's the best offer and from a good tenant.

PM me so that I can ask my agent to contact you directly.

Edited February 14, 2012 by propertysoul

[matrix0405 0]

If you rent out your own property without using an agent but the tenant came with an agent. Do you still need to pay commission to the tenant's agent or the tenant's agent will collect his fee from the tenant (his client); since the is no landlord's agent to co-broke with?

[GoalHome 1]

If you rent out your own property without using an agent but the tenant came with an agent. Do you still need to pay commission to the tenant's agent or the tenant's agent will collect his fee from the tenant (his client); since the is no landlord's agent to co-broke with?

For my case, I did not use an agent. However, agent with tenant came and like the place. Agent did not get any fees from me, but I supposed he was paid by the tenant. Of course to be fair I try not to trouble the agent too much since i'm not paying him, though he did offer help in lots of other matters to help get place ready for tenant. Frankly if he proves to be good during the tenancy, I wouldn't mind paying for his services when its due for renewal or finding a new tenancy.

[propertysoul 0]

If you rent out your own property without using an agent but the tenant came with an agent. Do you still need to pay commission to the tenant's agent or the tenant's agent will collect his fee from the tenant (his client); since the is no landlord's agent to co-broke with?

The industry practice is: If the monthly rental is S$2,500 or higher, the tenant does not have to pay any commission to the agent. The agent will get the full commission from the owner. If the owner has his/her own agent, it's a co-broke case and the commission from the owner will be splitted equally between both agents.

Hope this helps to clarify.

[propertysoul 0]

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