How to get paid for using a rental service

by Joe Zekas on 6/10/13

Kardas Photography, Navy Pier panorama Chicago IL

Chicago’s rental services a/k/a apartment locators a/k/a apartment finders advertise that they’re “free” to renters since the landlords pay their commissions – typically a month’s rent.

It doesn’t take much reflection to realize that renters are paying for that “free” service over the course of their lease. If you’re spending $2,000 a month on rent and make use of a rental service, you’re paying $2,000 for your “free” service.

Major landlords don’t allow rental services to negotiate the rent or any other term of a lease on your behalf. That’s just one of the many things rental services won’t tell you that you ought to know about using a rental service.

Another thing you ought to know is that the cost of using a rental service is fully negotiable, and you can ask your rental service to rebate a part of their commission to you. If you plan to work with a rental service, read anything you sign carefully before proceeding. Then, once you’ve settled on an apartment, and before you commit to it in writing, determine the most strategic moment at which to negotiate the level of rebate you think is appropriate to the level of service you’ve received.

Real estate brokerage firms that rent homes and condos listed in the Multiple Listing Service typically split the one month commission equally between the firm that represents the owner and the firm that represents the renter. That’s one of the reasons that most rental services won’t show you MLS-listed properties despite the fact that they may offer the most value to renters and brokers can negotiate price and terms. It’s also the case that renting MLS-listed properties requires more effort in scheduling showings and follow-up, and requires a higher level of professionalism and knowledge.

You can, of course, also negotiate the terms of any rebate before beginning to work with a rental service. If you’re looking to rent in one of the high-rises on our at-a-glance apartment lists, the options are so limited that it’s realistic to ask for at least a 50% commission rebate.

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{ 8 comments… read them below or add one }

Mary O'Donnell June 10, 2013 at 8:48 PM

Author you are advocating fraudulent business practices. When a tenant takes my time, my gas and my knowledge of Chicago luxury apartments, why would you ask them to – at the end of my tour – request a discount? Am I giving them less than the service they requested of me? I may be a new apartment “locator” but some clients can take a day of time viewing homes and with the cost of gas it isn’t fair to say, ‘do it for half’. Would yo do that to your CPA? Lawyer? Car Mechanic? Contractor? At the end of the day, ask for a rebate?

Formula for success: rise early, work hard, strike oil.
J. Paul Getty

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Joe Zekas June 10, 2013 at 9:18 PM

If Mary O’Donnell is your real name you don’t have any real estate license.

You say you’re new to the business. If you survive for very long – and the track record of new rental agents makes it a long shot – you’ll learn the difference between an honest negotiation and “fraudulent business practices.”

As a newbie the odds are very high that you deliver less than the service your renters expected.

I did get a good chuckle out of the notion that burning $4 worth of gas entitles you to anything.

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Ben L June 10, 2013 at 10:18 PM

There is a definition for “fraudulent business practices”. You should look it up, and then compare it to what Joe is suggesting. To your probable surprise, you will discover that one is nothing like the other!

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Leo S June 11, 2013 at 5:43 AM

Mary, a client who negotiates a fee after services are rendered isn’t a fraud.

We do have other words for that behavior however. And advocating the same.

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Derek June 11, 2013 at 3:12 PM

“It doesn’t take much reflection to realize that renters are paying for that “free” service over the course of their lease. If you’re spending $2,000 a month on rent and make use of a rental service, you’re paying $2,000 for your “free” service.”

With this being the case, tenants are obviously indrectly paying extra $$$ to live at some of these major landlord buildings, seeing as the prices are seemingly the same whether you go through a realtor or not. I think ill just stay away from any property or building that lists with realtors and just try to find landlords directly. Unless i’m wrong about this…..

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Mary O'Donnell June 11, 2013 at 6:41 PM

The market is the market. When the market is strong, some rental buildings choose not to participate and / or reduce their fees. When the market is weak (just wait, its coming) they pay full month fees and sometimes 150% and even 200% fees. AND give tenants a month free. Its all about maintaining their PSF rents for refinancing and selling of the rent rolls. This blogger always paints a negative picture of apartment brokers. T

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Joe Zekas June 11, 2013 at 8:47 PM

Mary O’Donnell

I hope you know more about apartments than you do about how refinancings are underwritten and “rent rolls” are valued on a sale.

I try to paint an accurate picture of rental services. Of necessity that’s an overwhelmingly negative one. Anyone who sorts through the fraudulent positive reviews of rental services on Yelp will see that renters have an equally negative view.

Is Mary O’Donnell your real name? Do you have a license? How long have you worked at a rental service?

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derek June 11, 2013 at 9:38 PM

These rental services may have a real bad reputation. I wouldn’t not know as I have never used one. According to the online reviews though, many of these major landlords seem to have extremely negative reviews from renters too.

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