It’s challenging when you’re trying to compare different services that seem on first glance to be similar. To make sense of it all, you need to know what’s behind the offerings. Regardless of whether your agent is a buyer’s agent, renter’s agent, sales agent or property manager, the same applies - cheap services are cheap and you get what you pay for. In addition, you probably remember the adage, “if you think it’s expensive to hire a professional to do the job, wait until you hire an amateur”.

If a service seems cheap, ask yourself what you think a reasonable fee is for the business owner to charge per hour.  Then divide that by the overall fee.  How many hours of service does that provide?  Now ask yourself if it seems even remotely possible for an agent to do a good job in so few hours. 

One agent boasted that they have assisted 180 clients in less than two years as a solo operator.  This is approximately 9 clients per month allowing for a short holiday each year.  In a month, working 40 hours per week, there are 160 hours.  9 clients equates to 17 hours per client.  Is it possible to provide a good rental search service within 17 hours?  I work with 2 – 3 clients each month and it takes me about 60-80 hours to provide a good level of service to each client.  I don’t know how it is possible to provide a good service for less than that.  A full day of inspections (just one day) can be 10-12 hours alone just with travel time, inspections, discussing the homes with my client and writing inspection reports for those homes.  That doesn’t include extensive and forensic property research, assisting a client to decide where to live, application preparation and submission, liaising with agents, property negotiations and support after the application is approved and throughout the lease term.  Then if several weeks of service are needed to find the right home … you can see how the hours add up.

Cheap services provide less service (or else they work for something like $10 per hour).  So the thing to look at is the terms of the service offering.  How many inspections will they do for you?  Do they limit the number of hours of service that they’ll provide?  If your application is rejected, will they continue to work with you?  How detailed is their property brief?  How detailed is their property evaluation?  A limited brief can’t possibly ask enough questions to make the property evaluation thorough enough.  Perhaps you would be better off looking on domain yourself?

 Be cautious if:

•  A service seems cheap. It probably is.

• The business operates Australia-wide or in more than one State. The cost of running a legitimate real estate agency Australia-wide would require licenses, professional memberships, insurance, property data subscriptions, professional development and legal obligations to be held and maintained in every Australian State. That cost alone is prohibitive, let alone the cost of the time to actually provide the service. Do you ever find real estate sales or property management agencies operating Australia-wide? You don’t because the cost is prohibitive. It is simply not possible.

 Does your agent hold a real estate licence?

Any person who performs real estate agent functions must hold a current real estate agent’s licence that is current in the State in which they work.  If your agent doesn’t require a license - it would be because they don’t provide any real estate functions. What does this mean for you? It means that they can’t apply for homes on your behalf, they can’t act on your behalf, and they can’t represent you or negotiate the lease or rent for you. In other words, they can do the sorts of things that your friend or family member can do for you, and no more. If you need an agent who can do more for you than what your friend can do, then you need someone who holds a license.

What can a licensed real estate agent do? Real estate agent functions include lease negotiations, acting as an agent for a prospective purchaser, seller, landlord or tenant, introducing a prospective tenant to a licensed agent or to the landlord, representing a person through a property transaction and negotiating transactions (like buying, selling, exchanging or leasing property).

 You can check your agent’s license number on the Fair Trading website:

https://www.onegov.nsw.gov.au/publicregister/#/publicregister/search/Property. 

 A licensed real estate agent:

•  Abides by the Rules of Conduct: https://www.fairtrading.nsw.gov.au/housing-and-property/property-professionals/working-as-a-property-agent/rules-of-conduct . This sets the standards of all real estate agents in NSW.

• Will provide you with an Agency Agreement. An Agency Agreement is similar to a power of attorney but with an in-built fiduciary duty to act in your best interests. It is also a contract for services to be provided. https://www.fairtrading.nsw.gov.au/housing-and-property/property-professionals/working-as-a-property-agent/agency-agreements explains the various details that must go into an Agency Agreement. The fiduciary duty of care is what protects a client’s interests.

• Undertakes continuing professional development each year so that their knowledge remains current: https://www.fairtrading.nsw.gov.au/housing-and-property/property-professionals/working-as-a-property-agent/Continuing-Professional-Development-CPD-requirements

 Once a person holds a real estate license, they can:

• Obtain the necessary insurance that is required in order to carry out real estate functions including a rental search service

• Become a member of professional real estate bodies such as the Real Estate Institute: this ensures a connection with the industry, access to continuing professional development, mentoring, advice and a way of maintaining currency of practice

• Subscribe to professional property data portals

When you consider what is actually involved in running a real estate agency that can represent tenants, it’s easy to understand that LREAs incur expenses such as continuing professional development, insurance, operating under legislative requirements that protect your interests, the purchase of property data subscriptions to research properties and accessing professional memberships to maintain up-to-date professional knowledge of the issues that affect you as a tenant / renter.  All of this, combined with years of experience are used for your benefit.  

When we consider the real cost of a cheap service, we know it’s no different to going to a registered dentist versus a backyard operator.  Both can remove your teeth for you but most people would choose a qualified and registered dentist. If you find that other providers seem “cheap”, you should first check if they are licensed.  If they’re not, then it’s no wonder they’re able to charge so little: their business has no overheads because they are doing no more than what your friend or family member can do for you, whether it’s buying, renting, selling or property management. If you’re seeking to be represented by a licensed real estate agent who has your best interests at heart, I’d love to help you.

Melissa Maimann is a licensed real estate agent (renter’s agent and buyer's agent) in Sydney. She saves renters valuable time and frustration offering an affordable service that finds and secures the best rental properties quickly, easily and effortlessly. If you need a Licensed Real Estate Agent to find your next rental home for you, don't hesitate to make contact.