Should You Work With Renters as a Real Estate Agent?
You got into real estate to buy and sell properties, but then, the unexpected happens— A seller wants to rent out their property instead of sell. Perhaps they started off as a motivated seller and then decided that renting was the better choice. Now, you’re faced with the decision. Should you help them rent out their property?
Or maybe you’re coming from a different angle. Perhaps renters are reaching out to you for your professional expertise in navigating a particularly difficult real estate market. Is it a good use of your time to help renters locate a dwelling, or should you refer them and keep it moving?
If you’re debating whether or not rentals should be part of the list of real estate services that you provide, the answer is “yes.” There is a long list of reasons why working with rentals is a great idea, especially when you’re just starting out as a real estate agent. Here are the top benefits:
While you won’t get the exact same paycheck that you would from selling a home, you’re still going to make some money out of the deal. Typically, agents who locate renters can either earn a commission or get a payment that’s akin to a finder’s fee. We’ll discuss this more in a sec.
Selling a house takes a lot of time. On average, it takes 68 days to close (this number includes the typical close period of 30 days). But, the amount of time it takes to sell a property will depend on a ton of factors including the original listing price, the home's location, and the market conditions.
We all know of homes that have stayed on the market way longer than 30 days.
When you assist with renting a home, you don’t have to put in work and wait for months to get paid. You can close a rental deal in a week. You’ll get paid within a few days or maybe even hours, depending on your agreement with the owner. Rental transactions are appreciably quicker.
Income diversity is a beautiful thing. Instead of pinning all of your hopes and dreams on the next sell, you can mix your income so that you’re making money from renters, too. They make up a huge chunk of the real estate market.
In the US, 36.6% of households rent their homes . That's a little over a third of Americans who rent instead of buy. While you could focus exclusively on selling, why ignore all of an entire group of people who need your services now?
Real estate is all about relationships— who you know and who knows you. By helping renters, you’re helping yourself. You can use this opportunity to establish a lifelong professional relationship with your rental clients. Renters eventually turn into buyers, and when it’s time to buy, they’ll remember and call upon you for their buying needs.
In addition to renters turned buyers, you’ll also connect with real estate investors who desperately need your services, too. Since rental properties have an average annual turnover rate of 54%, property owners will need your help in the future. And they likely have more than one property to rent, too. You can help them keep their properties occupied and then help them sell once the time comes. You definitely need investors in your professional network.
In your first year of real estate, it's easy to hemorrhage money. Getting a real estate business up and running requires a lot of self-investment, and the sooner you make a return on that investment, the better. By working with rentals, you have a chance to make quick money, work in a field that you love, and make connections that will call upon you in the future. Sure, rentals won’t offer the big payday that you’ve been dreaming of, but it will get you honest work and provide cash flow to fund your new business.
Your network is everything. This is why working with renters makes sense.
In addition to making connections with prospective clients, you can also strengthen your relationships with fellow agents. Propose your assistance to other agents in your brokerage who hate dealing with renters. You can offer to show rentals in their stead or ask them to refer any renter to you.
You can also become the go-to showing agent for the property management companies in your area. They may work with their own team during business hours, but real estate doesn’t sleep. Offer to show properties after hours, on weekends, and on holidays. Your gracious offer may turn into a new rental, and it will also earn you the coveted top-of-mind spot when that owner/ property manager needs help or wants to refer others to you.
The market ebbs and flows. Sometimes, it’s easy to sell a home and other times, it’s painful. If your market conditions are unfavorable, it’s a good idea to diversify your income, as we mentioned above. Matching renters with properties is easy work and will provide a reliable source of income when the market suddenly changes.
Now, let’s delve into the good stuff— payment. How do you actually get paid when you assist renters?
There are several ways to get paid, but the most common is to negotiate a fee with the landlord (i.e. the owner or property manager). In most agreements, they will pay you a commission that’s equal to one month’s rent.
Some agents also collect an hourly fee for showing the rentals to clients.
You can expect payment within a week in the form of a commission check from the landlord.
Less commonly, the renter will pay your commission instead. This only happens in an incredibly competitive rental market.
So, you’re ready to help owners find renters. Great, but now you’ve got to convince them that you’re the perfect person for the job. How do you do that? Focus on the following:
If your owner is disheartened by the fact that they can’t sell their home, don’t wait for them to take their listing elsewhere. Be the one to suggest that they rent instead of sell. Then, back up that suggestion by offering to promote the listing to your professional network.
Owners need to be aware that it’s difficult to find renters for higher-priced properties. This is where you and your professional abilities come to the rescue. Through your marketing talents and expansive network, you’ll be able to find renters who are willing to pay those higher prices.
Not only are they paying for you to find renters, but they’re also paying for you to show the property. Owners, especially if they’re only renting one property, don’t often have the time or ability to show properties on demand. You do. This is a powerful selling point.
You’re passionate about real estate. It’s your job and you love it. Your passion is contagious and will positively affect renters who may be interested in the property. This is something that most owners don’t have and desperately need in order to rent a property.
More than just passion, you also know all about the housing market. You can help owners who need professional advice on pricing and marketing their property for rent.
Unless you agree to a different setup, you can reassure the seller that you’ll only ask for a commission. This guarantees to them that you’re motivated to find a renter quickly and that they won’t need to pay you until that happens.
Now, let’s flip it. How do you get renters to work with you instead of doing it on their own? Start with this:
You know the area. Not only do you know about rentals, but you also know about the buy and sell history of the neighborhood. You can use this to help renters navigate through the market and find a good deal. You’ll be a trusted guide.
You’re connected. This is one of the biggest reasons why a renter should work with a real estate agent instead of doing their own search. You have members-only access to the MLS. This means that you can find places that you know of properties that they can’t find on their own. You also are privy to unlisted and new to the market properties through your network connections.
Just because you’re assisting renters doesn’t mean that you can’t use your real estate skills. Rental prices aren’t written in stone. You can help the renter find the best price or negotiate for them a better deal, such as the inclusion of certain appliances or a lower security deposit.
As a real estate agent, you’re not boxed into buying and selling. You can also add “rentals” to your list of services. This allows you to expand your offerings while simultaneously broadening your professional network.
Before you go, check out these related posts:
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