relocating Posted June 9, 2011 Share Posted June 9, 2011 Our house is listed for sale, but we have not received an offer yet and would like to put it up for lease. Our realtor has given as a draft residential lease agreement that has a 100% of one full month's rental as fee payable when the property is leased (fair enough)but it also has a renewal fee of 100% of one full month's rental if the lease is renewed after one year. Is this standard? Can I fight this? I don't think is fair to get that renewal fee since he won't have to list the house, or do a background check, or credit check, or anything. Plus, he won't be the property manager. After the house is leased, he won't have to move a finger. Does he earn a renewal fee in perpetuity?Many thanks for your help! Quote Link to comment Share on other sites More sharing options...
west20th Posted June 9, 2011 Share Posted June 9, 2011 Our house is listed for sale, but we have not received an offer yet and would like to put it up for lease. Our realtor has given as a draft residential lease agreement that has a 100% of one full month's rental as fee payable when the property is leased (fair enough)but it also has a renewal fee of 100% of one full month's rental if the lease is renewed after one year. Is this standard? Can I fight this? I don't think is fair to get that renewal fee since he won't have to list the house, or do a background check, or credit check, or anything. Plus, he won't be the property manager. After the house is leased, he won't have to move a finger. Does he earn a renewal fee in perpetuity?Many thanks for your help!Was in the same situation in 2009. The realtor took one months rent for a fee. There was no renewal fee. Quote Link to comment Share on other sites More sharing options...
Simbha Posted June 9, 2011 Share Posted June 9, 2011 Can I fight this?Yes. No written contract is valid until it's been negotiated and signed by both parties. Like any negotiation, you have to be willing to walk away from the table in order to be in the strongest position. In this case, those are standard terms but the corresponding clauses in the agreement can be removed. It's never seemed reasonable to me that an agent receive an extra month's rent upon renewal if they're not actively engaged in the renewal itself. It's difficult enough to make money as a property investor even without an average of 8.3% of revenue being cut off the top.Please note that attempting to negotiate this may result in your walking away from the agent and attempting to find another - who themselves might have the same terms. However, it sounds like you're in the beginning of the process and haven't yet found a lessee. If that's the case, you may not be hindered significantly by 'shopping around'. Just be sure you don't already have a contractual obligation with your current agent which prevents you from doing so. Quote Link to comment Share on other sites More sharing options...
barracuda Posted June 9, 2011 Share Posted June 9, 2011 I've been in the same situation. The renewal seems to be a standard clause. Just talk with your realtor, and if they agree, cross out the renewal clause in the contract and both initial next to it. More than likely, your realtor is not going to turn down one-month's rent right now for the possibility of a second rental payment in a year. Quote Link to comment Share on other sites More sharing options...
20thStDad Posted June 10, 2011 Share Posted June 10, 2011 Realtors are so overpaid, fight that crap. Quote Link to comment Share on other sites More sharing options...
relocating Posted June 10, 2011 Author Share Posted June 10, 2011 Just be sure you don't already have a contractual obligation with your current agent which prevents you from doing so.Gee. I guess I may be stuck then. We have an agreement with this realtor to sell the house. If we fight the lease renewal fee, he may refuse to list the house for rent, and we may not be able to list it with another realtor because of the agreement. But I am fighting this renewal fee anyway.Thanks y'all for the advice! Quote Link to comment Share on other sites More sharing options...
Simbha Posted June 10, 2011 Share Posted June 10, 2011 (edited) Gee. I guess I may be stuck then. We have an agreement with this realtor to sell the house. If we fight the lease renewal fee, he may refuse to list the house for rent, and we may not be able to list it with another realtor because of the agreement. Just as no contract is valid until it's signed by all parties, it's also the case that all contracts can be broken - though, usually with consequences. I'm not suggesting you automatically go out and violate your contract with your current agent; however, I believe you should always consider that as an option and simply be aware of (and strongly consider) the ramifications of such an action. If it turns out that's better than the alternative [staying within the contract], then you can - and maybe should - break the contract. But, be sure you're aware of the full consequences of doing so. A lawyer may be able to assist you in the legal analysis of this. That's generic advice. In this particular case, it's likely that a legal analysis will show that breaking your contract may result in costs which exceed what you're trying to avoid (i.e., one month's rent). However, note that there's nearly always a term/duration to the agreement that you have with your realtor; be sure to read it carefully and see if there's any wiggle room. Again, you may wish to have an attorney look into the matter, too - if it's of consequence to you. There IS another option available... Simply don't renew the lease of the tenant which your current realtor finds. That may seem petty, and it certainly has the potential to punish an innocent bystander (your tenant) for something which is not their fault, but it is a way to stay true to the terms of the agreement with your realtor and yet not give them a dime after the first renewal. One final note: I spoke with a friend of mine who's a residential property investor about your question. He indicated that, while technically some contracts do come with those clauses, they're not usually enforced. Sure, they're enforceable but realtors (in his experience) usually don't go around checking whether a previous tenant has renewed. They're on to bigger and better things. Arguably, the onus would be on the realtor to enforce the clause of the contract and bill you for the renewal fee (if it comes down to that). Just try to negotiate it, and you'll probably win out. Good luck! Edit: Edited to say "Good luck!" Edited June 10, 2011 by Simbha 1 Quote Link to comment Share on other sites More sharing options...
relocating Posted June 17, 2011 Author Share Posted June 17, 2011 Thanks your all for your help. I wrote a very nice letter to my realtor and sent it by certified mail (because he wasn't answering my e-mails) He has agreed to drop the renewal fee Quote Link to comment Share on other sites More sharing options...
Marksmu Posted June 17, 2011 Share Posted June 17, 2011 Realtors are so overpaid, fight that crap.I could not agree more! Realtors do serve a purpose, but the flat % that they make on a deal has not ever been adjusted for the nearly constant increase in price of property....When I see a Realtor pocket 3% on a $3,000,000 deal ($90,000) simply for taking some pictures, uploading them, and placing the listing on HAR it makes my stomach roll....Many times there is not even 2 hours of work involved in listing a property...The fact that reputable realtors are willing to post a rental property for $1600/month shows you that it does not cost them anything to do so. You could sell your house for that too....its the same amount of work. Quote Link to comment Share on other sites More sharing options...
Simbha Posted June 17, 2011 Share Posted June 17, 2011 He has agreed to drop the renewal fee That's great! Good job! Quote Link to comment Share on other sites More sharing options...
MiDTOWNeR Posted September 19, 2011 Share Posted September 19, 2011 WOW, sounds like a shitty realtor if it took a certified letter to communicate with him. Quote Link to comment Share on other sites More sharing options...
LTAWACS Posted September 19, 2011 Share Posted September 19, 2011 WOW, sounds like a shitty realtor if it took a certified letter to communicate with him.that is usually the case. Quote Link to comment Share on other sites More sharing options...
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