Call me crazy, but I get a little annoyed when real estate agents call me about a rental listing.
Here’s a typical conversation:
Agent: Hello, this is John. I’m a real estate agent with AAA Real Estate. Is the home for rent at 123 Main Street still available?
Me: Yes it is.
Agent: Well, it’s not in the MLS.
Me: A silent pause
Agent: Anyway, my client requested to see it. And I want to show it now.
Me: I’m having an open house Saturday at 3 p.m., and your client is welcome to come.
Agent: No, that doesn’t work. My client wants to see it sooner. When can I show it?
Me: You can’t show it at all. Tenants are currently living there, and I’ve made arrangements to have an open house Saturday at 3. Please invite your client to come then.
Agent: Do you pay an agent commission?
Agent: Thank you. Goodbye.
And I never hear from this agent or their client again.
Here are four reasons why you shouldn’t use an agent when you want to rent a home:
1. Real estate agents use only the MLS
If you ask a real estate agent to find you a rental property, they will most likely look only on the Multiple Listing Service (MLS), which only agents can access.
In fact, I asked an agent the other day how he finds rental properties for clients. He said he finds them through the MLS.
Here’s the problem of looking only at the MLS for rental properties: Since only agents can list properties through the MLS, real estate agents are missing all the properties landlords like me advertise. And if your real estate agent is missing out on properties listed by non-agents, you are too.
You are better off, when looking for a rental property, to look online.
You’ll probably find lots of rental homes by looking at various real estate sites on your own, more than what your real estate agent will find by using only the MLS. Of course, you can always find properties and send them to your agent, but then why not just contact the person on the listing yourself?
2. Agents expect to be paid
Real estate agents mainly work with clients who are buying and selling homes. In those cases, the seller typically pays the real estate agent by giving the agent a percentage of the home’s selling price.
So the expectations for most real estate agents who are helping a client trying to rent is that the landlord will pay the agent for finding a tenant, typically one month’s rent (similar to getting a cut of a home’s sale).
But in a rental market where most applicants find rental properties without an agent, landlords have no reason to pay an agent. In other words, if I have five applicants for a property, four who represent themselves and one who comes with an agent who expects me to pay them a month’s rent, guess who I’m not renting to?
If you use an agent in a market where most people are finding properties on their own, you will likely be taking yourself out of the running to land a rental property.
3. Agents don’t really want to work with you
I’ve always suspected that statement to be true, and now I have a couple of stories to back this up. I think this probably represents what many agents think.
A real estate agent called me the other day on behalf of her client, and when I told her I don’t pay an agent commission, she let me know that she doesn’t know what to tell renters who call her for help. She wants to help them find a home, but if the landlord won’t pay her commission, she is not interested in working for free.
Another agent told me that he usually doesn’t work with clients looking to rent but that he will sometimes do so to help a friend out.
Since it’s not the norm for homebuyers to pay an agent (home sellers typically do), renters and agents expect the landlord or property owner to pay the agent just as home sellers (owners) do. But while most home sellers use and pay real estate agents, most small-time property owners do not use agents to get their property rented, so they have no interest in paying your agent.
If you really want to use a real estate agent to help you find a rental home, you might want to consider paying your agent yourself.
4. Agents often do more harm than good
Landlords who know their business find out what market rents are for similar rentals in their area. (I use the Cozy rent estimate tool in addition to keeping up with rent prices in my area.)
But when a real estate agent comes along, they are usually loaded for bear and ready to negotiate rent price—it’s just part of their job, like offering less than asking price for a home to buy. Although that’s standard practice for the home buying process, it’s not typical for landlords like me who plan to rent the property for the price listed.
Just as I don’t pay agents a commission, I am not interested in taking less than my advertised rate for my rental properties. If you’re paying an agent for their great negotiating skills, your money is largely being wasted when it comes to renting versus buying a property.
When real estate agents are helpful
There’s a place for real estate agents and rental properties. In big cities like San Francisco or New York where it’s difficult to find housing, you might benefit from using an agent. Or if you are relocating and know nothing about the area, you might need help from an agent who can show you around. Other than that, you are typically better off to cut out the middleman and find a rental house yourself.