Tenants should NOT pay the commission
For quite some time now, an interesting phenomenon has been playing out in Slovakia. As a tenant you're looking for a flat, you finally find what you need, and the agent tells you that you'll be paying them a commission. But why you, when you never ordered any service?
When it comes to renting out flats, there are two options, just as with sales. The first option is that you, as the landlord, don't have time to look for a tenant, so you approach an estate agency. The agency takes care of home staging, photography, advertising, viewings and preparing the contracts for you. The landlord ordered the service and received the service, so the landlord pays for the service.
The second option is that the tenant hires the agent. They don't have time to keep an eye on listings and hunt for flats. Or they come from abroad and want an agent's help in an unfamiliar market. In this case the agent searches for a flat for them, goes to viewings with them and, at the end, either prepares the contract or checks the one drawn up by the landlord. The tenant ordered the service and received the service, so the tenant pays for the service.
On the Slovak market, however, I also come across a kind of hybrid of these two options. The landlord ordered the service and received it, but the tenant is expected to pay for it. Why should they, though? It was the landlord who got the home staging and the photos, it was the landlord who needed the advertising and, most importantly, the lease agreement is drafted to give the landlord the strongest possible position, not the tenant. That's why it looks less like a service fee and more like “protection money”. Either you pay, or I pass the flat on to another applicant who will pay this “commission”.
So why does this happen? Mostly it's the agents' fault, and to a lesser extent the landlords'. A landlord puts the flat up as a private listing. Within moments a dozen agents get in touch, all wanting to take the flat on. But the landlord doesn't want to pay a commission – that's exactly why they advertised privately. The agent, however, finds a way: “Don't worry, sir, the tenant will pay it.” What the landlord doesn't realise is that this extra fee makes their flat less attractive.
How can you protect yourself? If you can, don't pay a commission as a tenant. You might miss out on your dream flat, but is it worth an outlay equal to a whole month's rent? Let's look at an example:
If the monthly rent is EUR 700 and you pay a commission of the same amount, you have effectively overpaid for the flat by about EUR 60 a month over the year (EUR 700 / 12 months). If you don't pay that commission, you could, for example, enjoy a parking space with a similar flat for the whole year. Or have a flat in a better location for EUR 760 a month. Either way, you get something in return for your money – a parking space or a better flat.
And a final piece of advice? Choose listings from estate agencies that are paid by the landlord. Besides better communication and a better-run letting process, you won't be paying for something you never ordered.
