Realtor Fee - 1 Month's Rent?

Question

Hello,

I'm looking to purchase a duplex in Michigan I found that is currently rented. Looking over my realtor's broker agreement, I noticed that in addition to a typical 3.5% commission fee, there's a "rental fee" for which I would have to pay him one month's rent since it's an investment property. I haven't seen a fee like this anywhere in the forums or blogs. Is this typical?

Thanks

Account Closed · Answer

@Joel Heck, I would say this is abnormal. I would run away from any agent/realtor or any other sales professional that attempted to pull such a fast one.

Normal for me:

3% for an buy/sell

One month's rent for finding new tenant & signing lease.

John Thedford · Answer

You need not pay a fee unless a service is rendered. If you purchase a property with current tenants, you should not owe a fee! My .02

Joel Heck · Answer

Thank you all for the responses. I was able to lower the fee, and my realtor agreed that the rental fee was for finding a tenant, which doesn't apply in this case.

Denny Robert · Answer

Most buyer agents don't charge 3.5%, they receive whatever is in the MLS plano. In my market this is usually 2-3%. Sometimes there is a bonus offered (full price offer by a certain date or something like that). If my client received an offer from a buyer agent expecting my seller to pay them a 3.5% commission, I would advise my client to counter with price they want, plus an extra .5% to pay the buyer agents extra fees.

It wouldn't make sense to charge a rental fee for a unit which is occupied. If you find a property that isn't occupied and you intend to have him fill it then there is typically a rental commission/fee. In some markets that is 1 month's rent, in more competitive markets it can be less.

Steve Vaughan · Answer

Woah. I will continue to find my own deals and my own tenants, thank you. How's it even possible to earn a dollar operating like this?

If I hire a PM, they will be spreading their placement fee out the length of the tenancy. It's bogus they are completely unharmed by placing a slow pay or no pay tenant. If their tenant performs, they'll get their fee. If not, they won't.  Put them in our shores little bit for a change.

Lance Petway · Answer

Hey Kati, How are you.  I am an investor on this side of the state in the Metro Detroit area, however I have family in Kentwood and have bought property there and in Spring Lake/Grand Haven in the past.  How is the market over there right now? I will send you a connection request.

Dawn Brenengen · Answer

@Joel Heck  That's interesting.  I would pay a month's rent to an agent or property manager to fill a vacancy, but not for a unit that is already filled when buying the property.  Isn't his 3.5% enough?  Also, 3.5 seems a little high. What's the price point of the property?

Kevin Siedlecki · Answer

@Joel Heck. It is typical for realtors (or property managers) to charge one month's rent to fill the apartment, however, that should be separate from the sale contract. The realtor might be trying to count the fact that it is already rented as filling it for you. You might want to check with someone in your state, since a lot of norms vary state to state, but I have never and would never expect to see more than the standard commission in the sale contract. The seller should be paying that, anyway.

Ruth Bayang · Answer

I typically pay one month's rent to my property manager who finds me a new tenant once a unit is vacated. But not my realtor.