Leasing & Property Management Services
Leasing Service or Tenant Placement Only (TPO) Service
In this context, “Leasing Service” refers to placing the Tenant and “Property Management Service” refers to any service provided by the Broker after the Tenant is placed.
Leasing Service includes advertising the property, showing the property, taking Applications, screening Prospective Tenants, negotiating on behalf of the Property Owner, and preparing the Lease for both parties to sign.
We will schedule showing service for your property with our REALTORS and Cooperating REALTORS. We will negotiate on your behalf, screen Potential Tenants, and prepare a Lease for both parties to sign online. The Tenant will bring the initial funds to our office in the form of Cashier’s Checks to start the Lease. Our fees are taken out of the initial funds provided by the Tenant.
For a Brokerage Fee of 50% or 100% of the First Month’s Rent, Birmingham Home Leasing will list your property in the local Multiple Listing Service (MLS) which will syndicate to Zillow, Trulia, Hotpads, Realtor.com, etc. (if your property is not also listed for sale). If another Agent brings the Rental Customer that you accept, we will pay half of whatever fee you pay us to that Agent. Most Cooperating Agents anticipate to be paid 50% of the First Month’s Rent when they show a rental property. The commission rate is available for the Agent to see (not the public) in the MLS Listing. If you do not offer to pay a Cooperating Real Estate Agent 50% of the First Month’s Rent, then many will not show your property to their Customers. For that reason, 98% of Landlords choose our 100% MLS Rental Listing Service.
There are Two Types of Property Management Service
At Birmingham Home Leasing, you are not required to purchase our Monthly Property Management Services, they are optional. Many Property Owners just use our Tenant Placement Only (TPO) Services.
We provide Management Services for only $50 per month, while many of our competitors charge 10% of the Rent for their Management Service. We also provide the Traditional type of Management Service for 10% of the Rent.
We are often asked what is the difference between the $50 per month and the 10% of Rent Management Service? The answer is Limited Power of Attorney (LPOA) vs. Full Power of Attorney (FPOA).
Both Property Management Services include:
- Collecting the Rent from the Tenant and transferring it electronically to the Owner.
- Monthly and Annual Accounting for Rent Collection Services.
- Issuance of IRS Form 1099.
- Accepting Repair and Maintenance Requests from the Tenant.
- Escrow and Return of Tenant’s Security Deposit.
The differences between LPOA and FPOA Service are:
- For LPOA Service, the Broker provides quotes for the Owner to approve for repair and maintenance service and for FPOA Service, the Broker approves the quotes on behalf of the Owner without contacting the Owner.
- For LPOA Service, the Owner makes the decision on approving the Tenant’s Application and for FPOA Service, the Broker makes the decision without contacting the Owner.
The Broker is exposed to considerably more liability from his own Client, the Owner, on FPOA Service. This is because there is an increased possibility that the Owner may disagree with a decision made by the Broker on their behalf and initiate Legal Action. On LPOA Service, the Owner makes all the important decisions, therefore there is little liability exposure for the Broker. Owners who contract for FPOA Service at the higher rate of 10% of the Rent are essentially paying for the Legal Fees that the Broker may need to pay in the future to defend themselves from a Legal Action taken against them by their own Client, the Property Owner. It is ironic that FPOA Service is actually easier for the Broker to perform than LPOA Service.
Why would a Property Owner pay more for a Management Service that requires them to surrender decision-making rights? The answer is that there are some Rental Investors who have so many properties that they cannot reasonably devote the time required to make needed Management decisions. Therefore, they have to hire a professional to perform the task for them.
Property Owners of just one or a few properties can save considerably on Monthly Management Fees if they are willing to make important management decisions and reduce the liability exposure of the Broker.
All Managed Properties, LPOA and FPOA, must have the house and the carpet professionally cleaned before the Tenant moves in. On a LPOA Managed Property, the Owner must supply the cleaning receipts to the Broker for the purpose of recording in the Move In Condition Report. On a typical house, professional carpet cleaning costs between $250 and $500 and professional housecleaning costs about the same. The Tenant will be required in the Lease to use the same vendors to perform professional housecleaning when they eventually move out. Using this technique, the Property Owner makes an initial investment on professional house and carpet cleaning and all future Tenants will be required to reciprocate when they move out.
It is common practice to make the Tenant responsible for mowing the lawn or requiring them to hire a professional to mow the lawn, but all other lawn and landscaping responsibilities will be assigned to the Owner. Most of these responsibilities only need to be performed as needed or once a year. These responsibilities include but are not limited to:
- Fertilization and weed treatment
- Raking the lawn if the lawn is large and there are a lot of hardwood trees
- Edging the lawn
- Trimming the shrubs
- Weeding the flowerbeds
- Replenishing the flowerbeds with mulch or pine straw
- Gutter cleaning
- Treating for fire ants