Low Letting Fees - Too good to be true

With the huge slow down in house sales the property market is seeing an increase
in demand for rental property. Some letting agents are starting to cut their commission charges hoping to increase their
property stock of which they can immediately offer to registered tenants. A
high turnover of properties will result in much needed revenue flowing into
your agency.

Such a de-crease in charges will suit some landlords or investors amidst the credit
crunch but long term this could not only damage your reputation as an agent
but could put considerable strain on your agency.

Landlords are well aware that a letting agent offering low fees will be cutting operational
cost else where which could result in their property not being advertised properly
or tenancy agreement not being executed correctly due to a junior member of staff with
little experience dealing with the set up.

Most agents will agree that there is a lot more to letting property than simply advertising
it in the local paper. A lot of time is spent preparing brochures, conducting
viewings, vetting prospective tenants, setting up agreements, conducting inventories
and checking in tenants. All this of course costs money to do properly and takes
a considerable amount of time & resources.

Landlords will naturally want to keep their costs down and you will always find customers
wanting a competitive rate. However, agents offering landlords exceptionally
low fees face the risk of lower profit margins, which will make it hard if not
impossible to survive the credit crunch.Generally fee cutting
tends to prove unprofitable, unsustainable and even costly, which could cause
your agency to fold.

When landlords choose an agent they do not base their decision on price alone,
but also consider experience, reputation, professionalism, qualifications, marketing
budget, to ensure your agency attracts a large number of tenants through its
doors and overall service.

If you feel your agency needs a competitive edge try to focus on other areas of
service rather than simply price. For example you could consider a sliding fee
for landlords that place more than one property with your agency, or you could
add value to your charges by offering a service or product that costs your agency
little or nothing to set up or provide. You could even consider
offering a bundle of useful information to new landlords explaining everything
a landlord should know before letting their property.

In the current climate with a number of non experienced home owners renting out
single rooms to full houses there is no better time to create a helpful first
impression of your agency; in the long run the home owner should return to you
to let their property.

To sum up, there is nothing wrong with healthy competition and being competitively
priced, if your agency is able to offer a service towards the cheaper end of
the market then do so. Bear in mind there are many companies that target high
end consumers and make substantial profits. If you're going to cut your prices
then do so in moderation and avoid cutting your throat.