Criticism of Rental Estate Agents in Tenerife Fair or unfair.
Criticism of rental Estate Agents in Tenerife,
Fair or unfair?
Estate agents are taking unfair criticism for charging contract / finder’s fees from clients looking for properties. Let’s look at the facts!
Rental Prices have gone up over the last few years but so have the selling prices. Therefore if you do a calculation of a fair % return for the sales property for a owner to get the correct rental value, you can soon see where the prices have increased. Any investor would want to achieve approximately 5% from their investment. Therefore, if you say an investor spends €200,000 for a property purchase, here is how you calculate the rent he will want to achieve.
€200,000 X 5% = €10,000 divided by 12 months = €833
The owner will have to pay his community fees which could be €100 pm and rates €33pm which gives us a total of €966. Then if he is charged 10% by the agent to manage the property plus a contract / inventory fee (As is done in the UK by reputable rental companies like Reeds Rains and Martins & Co) then he will lose around €90 per month. This is where it gets ambiguous! The owner sometimes will ask for a reduction and even for Agents to charge a one off fee. Some owners are pretty confident that they will get the €966 and so ask the agent to charge less or even to charge the client for the service to the client. With at least 1 months deposit being charged for damages, plus the first month along with a 50% or even i month of the total rental charge for the agent, then we are looking at a total amount to move in of €2,898. This is expensive but the agents are often instructed by the owner to do it this way so they get more money for the property. It’s a classic supply and demand situation. At the end of the day, someone has to pay the agent for their work!