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Changing Real Estate Agents or Property Managers.
A lot of people reach the point where they want to change their property manager or estate agent but they put it off because they imagine the process is going to be really difficult and stressful.
Does that sound like you?
Well, the good news is that here in Australia changing your property manager or agent is actually a relatively straightforward process that doesn’t need to involve a lot of stress. In fact, in many cases, when you appoint a new property manager they will actually do a lot of the work on your behalf. They want your business so they will try and make the transition as hassle-free as possible for you.
Sometimes there can be some complications depending on what is in your contract/agreement but in most situations there is a way to overcome these issues, as we will explain..
So, let’s take a look at the steps involved in cancelling a contract and changing agents. There are some differences depending on whether we are talking about a property manager (who is looking after your rental property) or a real estate agent (who is trying to sell your house) and we will mention these along the way..
You will have your reasons why you want to change property managers/agents. Perhaps it is due to poor communication – your agent is not updating you weekly or monthly (or whatever was agreed on in the contract). It is usually worth giving them the opportunity to improve their service before deciding on a change. If the problem is a complete lack of chemistry between you and the agent then that is a bit more difficult to resolve. Similarly, if the agent has engaged in any unethical behaviour you will most likely be looking elsewhere. Regarding estate agents specifically, you may want to change agents because you don’t think they are doing a good job of selling your house. Perhaps their photography was substandard, or your property is not getting enough online exposure? If they are genuinely underperforming then you definitely have grounds to make a change. However, do keep in mind that your house may not have sold because of other reasons, i.e. house sales can take a long time in some communities/environments – no matter who the agent is!
STEP 2: Find a new property manager/estate agent
It’s often a good idea to decide on a new property manager/estate agent before you finish up with your current agent because, as mentioned, your new manager/agent will be very helpful in making the transition smoother. Of course, you’ll want to be sure that you choose the right property manager/agent this time which is where RealConnect can really help. At no cost to you, RealConnect will provide quotes from a number of property managers/agents that operate in your area for you to consider. These managers/agents will all submit proposals to you, spelling out the services they offer, which enables you to make an informed decision. Finding the right manager/agent really doesn’t have to be a major headache for you. If you are in a situation now where you want to change your manager/agent, you’ll be only too aware of how important it is to make the right choice. Click the button below to find a new property manager or sales agent.
STEP 3: Check your contract/agreement.
Most contracts with property managers have a termination clause that usually requires giving 30 days’ notice of your intention to leave. Some property managers may try to convince you that you are locked in for the full term of your tenant’s lease. This is not the case due to the fact that management agreements in Australia come with a “no exclusive period for ongoing management of a property” clause. As mentioned, a 30 day notice period is usually all that is required but, once again, your new agent will be able to help you with this.
Estate agents’ contracts usually fall into two categories: a) Exclusive listing (with one agency only for an agreed time period) or b) An open listing – where several agents are trying to sell your property at the same time. The latter should not present any problems because you are not tied to that agent but if you have an exclusive listing you will have to look at the contract more closely to see if there is an opt-out clause and any termination fees (more about this later).
When you appoint a new property manager/agent they
may offer to inform your current agent of your
intention to leave. Of course, it’s up to you how
you want to handle this, but it is probably a good
idea to be upfront and honest and speak directly to
your current manager/agent about your intentions.
There are a couple of things to bear in mind when
you do this. Firstly, remember that this is a
business arrangement so emotions should be kept out
as much as possible, even if your relationship has
deteriorated somewhat. Of course, the manager/agent
is likely to try and keep your business, so you also
need to be firm about your decision. If you leave
the door slightly open they might convince you to
give them a second chance. It is also worth
remembering that all agents will have experienced
this sometime in their career and nine times out of
ten they are going to want “the break-up” to be as
quick and painless as possible. This is especially
true if they have dropped the ball in some way as
they are not going to want any unnecessary publicity
that may tarnish their reputation. Most agents will
also try and avoid burning any bridges in case other
opportunities arise further down the line.
So, when you request a release from most estate agents they are not likely to fight it, however, they may want to recover some costs from you. For example, they may ask you to cover the marketing/advertising costs (this is sometimes stipulated in the opt out clause of a contract).
As we’ve already stated, getting the right property manager/agent is crucial because when it comes to handing over they will do a lot of the leg-work for you (including most of the paperwork which is always a great relief!). So, in the case of changing property managers, let’s take a closer look at what exactly has to be done.
- You may have verbally informed your current manager that you plan to move but this needs to be put in writing. Your new property manager will often prepare this written notice on your behalf so all you have to do is sign. This document should then be sent by certified mail with a return receipt so that you have a record that it was sent and received.
- Sort out any costs that are due. Even when you have given the correct amount of notice some managers/agents will charge a fee for early termination. Be sure to check the contract carefully to make sure you are only paying what is due. This is also the time to pay any other fees owing to the agent. In the case of estate agents, it may also be in the contract that you are liable to cover some of the marketing/advertising costs.
- Now it is time to inform the tenants that there is going to be a new manager. A good property manager will make the effort to introduce themselves to the tenants and welcome them to the new agency. It is important for the tenants to know where their security deposits are about to be transferred to.
- Speaking of the security deposits, you should expect the transfer of funds from the previous manager to the new manager to take some time (often one or two months). This is because the previous agency will want to make sure that all expenses related to the property have been paid before they transfer the funds across.
- The new agent will likely offer to go and pick up all the files, keys, etc. from the previous agent. It is important that you receive all the important paperwork from the previous agent, for example, leases, records of all security deposits, and a statement showing all income and expenses related to your property.
The new agent will also liaise with the tenants to set up everything so that the rental deposits are paid into the new agent’s account from the transfer date.
There is one more important point to mention regarding estate agents. If you had an exclusive contract with your previous agent they will often want to be paid a commission if they introduced someone to you who buys the house within 6 months of your contract with them ending (even if they have done nothing more to facilitate the sale).In the rare case when an agent is not willing to release you, your only option then is to prove that they have breached the contract (i.e. they haven’t performed all the duties set out in the contract in a satisfactory manner). This course of action should only ever be taken as a last resort because it will most likely mean going to court. Thankfully, most managers/agents are not too keen on having everything exposed in a courtroom.
In most cases, anyone wanting to change their property manager or agent should go ahead and do so. As we have said, your new manager/agent will handle most of change-over on your behalf. Your main concern is to make sure you choose the right manager/agent and that is where RealConnect can really be of assistance. By using RealConnect you can see what they have to offer before you make your decision and don’t forget that the terms set out in an agent’s proposal are negotiable.