THE 7 MOST COMMON MISTAKES MADE......when choosing a Letting Agent, and how to avoid them
Contents Introduction 3 Mistake One Choosing an Agent based on their fees 4 Mistake Two Using an Agent without reference checking them 4 Mistake Three Using an Unregulated Agent 5 Mistake Four Using an Agent that does in-house Inventories 5 Mistake Five Using an Agent who markets property badly 6 Mistake Six Using an Agent that doesn t understand the eviction process 6 Mistake Seven Using an Agent that doesn t offer any Rent Guarantee Insurance 7 And finally Special offer to new Landlords 7 2 www.homexpertsuk.com
Introduction Letting Agents come in all shapes and sizes, so whether you are a newbie landlord or have a sizeable portfolio of properties, it is imperative that you choose the right Letting Agent to help protect and maximise your income from your buy-to-let investment. HomeXperts are a National estate and letting agency, specialising in Residential Sales and Lettings. We manage hundreds of properties for clients and most of our business has come from talking to unhappy landlords who have been recommended to us for our levels of service. Our Head Office in Worcestershire are members of ARLA, NAEA, ICBA and NAVA and operate to their strict codes of practice. We are also members of the Property Ombudsman. Through having extensive knowledge of the eviction process we have been able to help many private landlords who had found their own tenants, the tenancies had gone bad, and they need a letting Agent who could help and support them through the eviction process, and then assist with finding suitable tenants for their property. We very much hope you find this report helpful and wish you great success with your buy-to-let investment. www.homexpertsuk.com 3
Mistake One Choosing an Agent based on their fees I would never advise to choose your Letting Agent based solely on their fees, especially one that is offering really low ones. Mistake Two Using an Agent without reference checking them Before choosing your letting Agent you should do as much research on them as possible. The best advice I can give is to choose one that has been recommended to you by somebody you know and trust. However if this is not an option then take your time before handing over the keys to your buy-to-let as this can save you a lot of money and heart-ache further down the line. Letting Agents charge you if you decide to end their contract mid-term, so it is wise to do as much due diligence as you can. Testimonials on their website are a good starting point; also, don t be afraid to ask them if you can call some of their clients for a chat, if they are passionate about their service they will be more than happy to have their existing clients rave about them to potential clients. For example, recently I let a property for a landlord who had previously let his buy-to-let investment through a Letting Agent who charged the lowest fee possible. The Letting Agent had not undertaken any mid-term inspections to ensure the tenants were looking after the property. At the end of the tenancy the Landlord discovered that the tenants had sub-let the property and caused over two thousand pounds worth of damage and they owed three months rent arrears, which the Letting Agent had not bothered to chase.the upshot of this was the property was left empty for 6 weeks before it could be marketed, whilst the damage was repaired, causing a further loss of rental income. So by the Landlord saving an initial 1200 in management fees, he actually ended up losing just over 7500 in damages and loss of rental income plus all the emotional stress that came with it. So my top tip here is not to look for the letting Agent with the lowest fee possible, but to find out what value they bring to the table, do they include rent guarantee insurance* in their fee, in the event that the tenant defaults on their rent? This will save you a lot more money and emotional distress in the long term than a cheap agent that hasn t thought about how they can add value and protect what is probably one of the most expensive items that you happen to own! *I will be covering rent guarantee insurance and the benefits later on in this report. Have a list of questions ready based around their service levels, how quickly do they respond to calls and emails, do they give regular updates on how the marketing is going and constructive feedback after viewings. Another important one is to find out how quickly you will get your rent after the tenant has paid the Letting Agent. Ask them if they do yearly rent reviews as this will affect your income going forward. Good communication is key to a successful relationship, a good tip is to email or call a few of the letting Agents that you have short-listed and see how quickly they respond, this will be a good indication of how they value your business in the future. 4 www.homexpertsuk.com
Mistake Three Using an Unregulated Agent Mistake Four Using an Agent that does in-house Inventories Whether you use a Letting Agent for a Tenant find or for a fully managed service you should always have an inventory done by a professional Inventory Company (third party). The inventory is directly linked to the deposit taken on your property which protects against damages. If there is a dispute with your tenant s deposit when their tenancy comes to a close, then there is a far greater success rate of the dispute being resolved if the inventory has been done by a third party. The lettings industry is completely unregulated and landlords are frequently the victims of poor service at the hands of unscrupulous Letting Agents. Basically anybody can lease a high street unit or set up an on-line Agency with no experience at all and call themselves a Letting Agent! By choosing a Letting Agent who is regulated by a redress scheme such as the Property Ombudsmen, you can be sure you are dealing with a professional agent who operates to a strict code of conduct. My top tip here is ask the Letting Agent if they out-source their Inventories to a Professional Inventory Company, if they don t then you could run into problems later down the line. Also, ensure that they do mid- term inspections on your property to ensure your tenant is looking after it and hasn t sub-let it! Member agents operate under strict codes of practice and must meet certain standards relating to professional and ethical practice. Under the rules, agents are required to protect and promote their client s interests, while at all times acting in a fair and proper manner. If you are unfortunate enough to suffer at the hands of malpractice by a letting agent who is a memberthe Property Ombudsmen can make a financial award against the member agent. Our Head Office in Worcestershire are also members of ARLA, NAEA, ICBA and NAVA. www.homexpertsuk.com 5
Mistake Five Using an Agent who markets property badly The internet has totally changed the way that potential tenants now search for properties and the property portals are now classed as the new window for Estate Agents. Mistake Six Using an Agent that doesn t understand the eviction process When it comes to marketing think of the three P s Price, Presentation and Promotion don t automatically go for the Agent who gives you the highest valuation, Agents often do this to win instructions, go with one that can back up their valuation with evidence of similar properties in your area ( we call these comparable reports ) that have recently let, and choose a Letting Agent that gives you constructive advice on any improvements to your property that will enable you to let your property quicker. So before choosing your Letting Agent, I would strongly advise you to look on the property portals and see how they market their property. What are the pictures like are there pictures of half made beds and a sink full of washing up? A good Agent will take the time and care to ensure your property is shown in the best possible light. Poor marketing will put off potential tenants from even viewing your property and it will go stale on the market. So if you are not impressed by what you have seen then don t use, them as this is a good indication of how they will market your property. Ask if they intend to send you over the property brochure for approval before they publish your property on-line. Remember you only get one opportunity to make a first impression, make it a good one! Another top tip is to find out how they intend to keep you updated with the progress on how your marketing is going. Do they provide honest and constructive feedback after every viewing and weekly reports that are generated from the property portals which tell you how your property is being viewed by potential tenants? This will tell you if any changes are required with the marketing, make it a point to ask them how often they intend to refresh the marketing so that your property doesn t go stale on the market. Final tip - make sure the Letting Agent you choose accompanies all of their viewings you are paying them for a service, it is their job to let your property not yours! Before choosing a Letting Agent you should find out how deep their level of knowledge is about the eviction process. Whilst the majority of tenancies run smoothly, on the odd occasion the need for an eviction may arise. This is the time when you will benefit greatly from working with a Letting Agent who knows the eviction process in-side out as they can assist you and support you. If an Agent doesn t know how to correctly serve an eviction notice then they can delay things further causing more emotional distress and loss of rental income. A lot of Letting Agents just want to do all the good stuff that earns them their commission, this kind of Letting Agent is not a good option if your tenant is in arrears and you suffer a loss of rental income as a result. My top tip ask them to explain the eviction process to you in the event that it may happen, if they tell you they don t get involved then think twice about using them. 6 www.homexpertsuk.com
Mistake Seven Using an Agent that doesn t offer any Rent Guarantee Insurance In 2011 the eviction rate in the UK rose to a staggering 11%.If your tenant defaults on their rent, as the Landlord you are still responsible for paying your mortgage and if you are unable to meet these payments then you run the risk of your property being repossessed. Evicting a tenant can be a lengthy and expensive process, so you should ensure you have the necessary insurance in place to protect your rental income and cover all the legal costs associated with the eviction process. A good Agent will do all the necessary checks on a tenant prior to putting them forward for your property, however they cannot predict a tenant falling on hard times, a good tenant can be made redundant or become sick an unable to pay their rent. And finally Special offer to new Landlords I hope you have enjoyed reading my tips and found them helpful. By choosing Letting Agent who has thought about this and offers you the rent guarantee insurance or even better includes it free as part of their fee (I include this in my fee whether it is a tenant find service or fully managed) You will be able to minimize your financial risk and sleep easy with the knowledge that your buyto- let investment is being fully protected and managed by a safe pair of hands. As a special offer to Landlords I am offering a free evaluation of your buy-to-let property providing you with a comprehensive report on the rental income that you could achieve in this market and any improvements needed that may could increase the rent and make the property more rentable I wish you every success with your buy to let investment(s) www.homexpertsuk.com 7
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