9th March 2010

Consider The Source Of Potential Tenants

So the other day something occurred to me: It seems that where you advertise your vacant rental property can determine the “quality” of potential tenants.

I have found that with the past few vacancies, listing the property in the local Multiple Listing Service (MLS) seems to bring usually qualified, seemingly serious potential tenants with a decidedly lower “dirtbag” quotient.

It seems that when potential tenants show up with a Realtor in tow, they somehow had to convince said Realtor to work with them in the first place.

Now for those who aren’t familiar with the situation, Realtors typically don’t make very much when helping a tenant find a place to rent. In fact, the breakdown locally goes something like this: As a landlord, I pay one half of one month’s rent to compensate both real estate agencies for finding me a qualified tenant. So, for the Realtor bringing the potential tenant, they will see one quarter of one month’s rent less the commission split with their own broker.

Just to illustrate, if rent is $750 per month, one quarter of that is $187.50. Say the agent’s split of commissions with her broker is 80%, that works out to a big $150 commission on the deal.

Typically for a Realtor to do ANY running around for a whole $150, you will find that she usually has another relationship with the tenant. Maybe she worked for someone related to the tenant, helped the tenant complete a short sale on a home they used to own or something along those lines.

So in my experience, when a potential tenant shows up with a Realtor, it adds a little more credibility to their application. Of course, the real proof is in the pudding (or credit report as the case may be.)

My advice to landlords is to beware of those services that offer to completely spam all modes of advertising in the local area. I usually try to avoid sites like Craigslist due to the percentage of people who will place and respond to ads like this one. Not that I would ever place a similar ad but you get my drift.

There are currently 4 responses to “Consider The Source Of Potential Tenants”

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  1. 1 On March 10th, 2010, Right Advertising Finds You The Right Tenant | Real Estate Investing News Watch said:

    […] Visit our news sources but please leave us a comment. Click Here! […]

  2. 2 On March 23rd, 2010, Justin Palma said:

    Awesome post! I’ve been really lucky with Craigslist, but it sounds like “mileage may vary” depending on the region. But with using a realtor, you also lose the time drain of showing your own units – You can’t beat that!

  3. 3 On March 23rd, 2010, TheLandlord said:

    Hey Justin, glad you liked the post. Sorry for the delay in your comment showing up here but you were in the spam folder for some reason.

  4. 4 On April 17th, 2010, Mike Choi said:

    Great post on the pay structure of realtors. I rent out rooms in my townhouse and use craigslist and roommate subscription sites to find roommates; So far I had good luck with my roommates. I know looking for roommates and renting out a whole place is different, but the quality of people I ran into online seems to be reliable.

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