Have i got this maths right?

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    Have i got this maths right?

    It is an absolute fact that for a 12 month tenancy a difference in 1% of letting fees is equal to 4 days of rent. So while moaning about high lettings fees is natural one should be indifferent between an agent that charges 6% but takes two weeks to rent out a property on the one hand, and an agent that charges 10% but gets the job done straight away, all else being equal of course. Renewals muddy the logic somewhat but still.

    #2
    Well to the extent that this is a mathematical problem, you have it absolutely right as narrowly defined.

    But: The issue is:

    a) Not 6% vs 10% (16 days rent on your calculation) but 10% versus zero

    b) The denominator is not the rent paid but the L's profit margin, which in most circumstances might be about 10 to 20% of rent

    c) Renewal certainly "muddies the logic"

    d) What is the upshot/point of what you are asserting?

    e) There are many other factors here -- many aspects of rental are (or can be) vastly more expensive with an agent than a rent, so the straight fee is only part of it. Agents (or at least bad agents - who form a majority) also choose tenants to their benefit, arrange management to their benefit, an are muddled about who they act for.

    f) The fees that agents collect from tenants is effectively added to rent and is paid by both L and T

    g) What is the upshot/point of what you are asserting?

    h) See (d)

    i) There are good and worthwhile agents out there and their services are sometimes required.

    j) 10% is a hell of a lot, and approaches the profit of the landlord, and is made on an asset you do not own, and (in most cases) is based on minimal actual valuable work.

    Comment


      #3
      Originally posted by dominco View Post
      while moaning about high lettings fees is natural one should be indifferent between an agent that charges 6% but takes two weeks to rent out a property on the one hand, and an agent that charges 10% but gets the job done straight away, all else being equal of course.
      I would agree with your basic point. I think the reason for the situation you describe is that agent performance is not easily quantified or compared, while their fees are.
      There is a fine line between irony and stupidity. If I say something absurd please assume that I am being facetious.

      Comment


        #4
        The point is though that you cannot guarantee that an agent who charges a higher rate of commission well let quicker. How quickly an agent finds a tenant is not entirely within an agent's control.

        Comment


          #5
          Originally posted by dominco View Post
          So while moaning about high lettings fees is natural one should be indifferent between an agent that charges 6% but takes two weeks to rent out a property on the one hand, and an agent that charges 10% but gets the job done straight away, all else being equal of course.
          Lovely. With hindsight, right? As you cannot predict - ever - how long a property is going to take to successfully let... too many variables, including the Agent which is a nebulous comparator in itself as it's the property that sells itself - not really the Agent; might as well go on your gut feel. Your conclusion cannot be used by anyone in any way to help them in the future, is that right?

          Comment


            #6
            Originally posted by dominco View Post
            It is an absolute fact that for a 12 month tenancy a difference in 1% of letting fees is equal to 4 days of rent......
            Not when I did maths exams in the '60s:

            1% fees (ignoring any VAT ..) is somewhere between 3.65 days & 3.66 days rent, afaik. (See wikipedia for year lengths in days....
            http://en.wikipedia.org/wiki/Year
            )

            What makes you think it is 4 days?? How did you get to that very precise number??
            I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

            Comment


              #7
              Agreed you cannot guarantee that the agent charging 10% will get the job done any quicker than the agent charging 6%. However, when it comes to getting a property ready (e.g. furniture, photos, snagging, repairs etc) there are lots of tasks/factors that can impact the start of a tenancy by far more than the 4 days but one's instinct (at least mine was to begin with) is to spend excessive time sweating on agent fees and this is quite irrational. For someone just starting out like me, it was a bit of a reminder that in business one needs to lose the ego.

              Yes it's about 3.65 days but i thought i'd round up.

              Comment


                #8
                Originally posted by dominco View Post
                ......Yes it's about 3.65 days but i thought i'd round up.
                Really?? And you paid that to the agent?? Words fail...
                I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

                Comment

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