Have you ever looked at rental properties listed on trademe and thought ‘wow – they are charging a very high rent’, and made the assumption that the original price it is marketed at is the rent which will actually be achieved? Well you would not be the first person to be fooled here!
At the moment we are quite regularly hearing from landlords when pitching for a new management that another company has been in and appraised the rent at much higher than we have.
In my opinion this can be misleading to the landlord, as disturbingly, there appears to be nothing to substantiate how they have come to this price. We do a lot of research before advising on what an expected rent could be, looking at currently listed competition, data from property guru and tenancy services, as well as comparable properties we have recently rented in similar locations. We also always advise a price range – with a best price, worst price, and the price we believe is a fair and achievable rent in the current market.
So why is this so important? When you look at properties currently listed for rent, take note of the date they were listed, and if they have been sitting online for over three or so weeks often people start assuming something is wrong, and therefore don’t even consider the property.
Of course landlords are often hoping to achieve as much as they can, and this is of course their decision. It is however our job as industry professionals to advise them if we are unable to rent the property at the price they have chosen, giving regular feedback and providing activity reports, and advising them to lower the rent if necessary to get the property rented in a quicker time frame. This is of course particularly important when a property is vacant, as while it is sitting empty there is no income coming in to pay the mortgage and other bills, and often stressful situation.
We understand it can be frustrating if the market is not meeting your expectations but when you actually break it down, reducing the asking rent by a small amount, say $20 per week, can make a massive difference to enquiry levels, and when you work it out over a 12 month period, it makes sense to listen to the market.
For example if you reduce the rent from $520 to $500 per week, that is $1040 per year! That may sound like a lot but in fact it is only just over two weeks rent, and if the property is over priced, it will very likely sit empty for more than two weeks longer than if it was priced right at the beginning. Food for thought I think!
Of course the rental market does change frequently and even working daily in the industry I will admit we are not infallible, and sometimes we may need to readjust as well. What is important is listening to the market and being pro-active. Equally if you are having a rental appraisal done, ask for the information which backs up the rental figure which you are being given so you can see the real picture and won’t be potentially disappointed down the track.