Sub-Contractors – Earning commission

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  • #22997

    YoungAgent
    Member

    Hello everyone, possibly a touchy subject here for some but i just wanted to get a few other peoples views on this subject.

    How many other companies can honestly say they do not charge commission on contractors invoices or honestly disclose that they do?

    I work in South Wales and can honestly say our company does not charge anything on contractors invoices. We disclose this and are happy for any landlords to speak to our contractors direct.

    I recently did some research into agents around us (Knowing a lot of contractors helped as they just tell you these things), the majority of them admitted that they are asked to add commission to all invoices, ranging from 10% – 30%, the higher being on very low invoices. In fairness, some agents do disclose that they charge commission on invoices. Although the mark up they disclosed was a complete and utter lie. “We charge 10% on invoices over £250. Knowing that a contractor had added 20% to an invoice of £60.

    My point<i> </i>is, if you charge a management fee of lets say 10% to handle the day to day management of a property. Why does picking up a phone (If that, using Fixflo means you just click a button) warrant an additional charge for minimal work? Surely this is a management activity, not an additional service.

    So, how many of you honestly do not charge a percentage on maintenance?

    If you do, why do you think its right to do so?

    Would like to hear everyone else’s view on this. Happy Thursday!

     

    #22999

    Gump
    Member

    Never charged a penny additional to our management fee.

    It’s purely greed to charge any extra on contractors invoices

    #23000

    smile please
    Member

    We have started lettings this year after successfully establishing ourselves as selling agents.

    We do not charge a mark up on works needed at the moment, this may change in the future but i do not see the point at this time. It also helps differentiate us from others while our lettings side is becoming established.

    #23001

    mynextplace
    Member

    It’s getting harder and harder to survive as a letting agent (we don’t do sales).  We’re being asked to reduce our application fees to avoid ‘ripping of tenants’ and we are under-cutting fees in order to win instructions.  This, coupled with doing more and more for Landlords that goes beyond the remit of normal day to day management, means we are already stretched.  Adding 10% onto a £70 contractor call out invoice is simply an additional revenue stream. I think greedy is the wrong word to use.

     

     

     

    #23005

    YoungAgent
    Member

    mynextplace, do you disclose this to your landlords? I appreciate that you under-cut your fee’s to win instructions but i doubt very much during your appraisal stage you would tell them this, no one would but you certainly should.

    Let me ask you this, if you were the landlord, already paying a management fee how would you react to being charged more for you to just pick up a phone?

    If a landlord is asking you to do more and more do you not think it may be beneficial to issue the charges for that? For example we have been operational for 5 years now, solely lettings for 4. We have never charged fees on maintenance but should a landlord request an additional inspection or anything outside management, they’re charged per hour. Something i would bet is mentioned in your terms of business. You’ll see how quick they stop asking you to do these tasks.

     

    #23006

    YoungAgent
    Member

     

    smile please and Gump, i am glad to see there are other agents who do not charge.

    I have recently found myself wondering if we are one of the few who do not charge, possibly missing revenue. Although all landlords are surprised to hear that some agents charge and are oblivious of this happening.

    Do most agents around you charge extra on maintenance? Do you find it is a strong point to raise during your appraisals?

    #23007

    Gump
    Member

    Greedy is the correct word to use, let me explain why.

    You get paid 10/12/14% to manage someones property. Something goes wrong and you have to make two phone calls (one to the contractor and one to confirm with the tenant) what makes you think, and I will use your example, charging an additional £7 for a service you are already paid to do is justified?

    I can pretty much guarantee you that most months you take your management fee and have absolutely nothing further to do, so why charge extra the odd month that you actually do need to do some work for the landlord.

    #23008

    smile please
    Member

    I think all agents in my area add a mark up or at least the majority.

    we are in a competitive area and fully managed is between 6 -8% not many that charge 10% or higher.

    I dont think the LL really know about the add ons as agents dont talk about it on listings, its small in the T&C’s – I get the guys to mention it and it has help win the odd instruction.

    However, to be totally transparent i did say above we do not add an add on at the moment. To be honest, given the relatively low fully managed option we offer, given the overheads etc we will probably in the future add a 10% charge to any repair over £100.

    This is in line more with arranging new bathrooms / kitchens at end of tenancies maybe redecoration.

    I think this is only fair, if a LL want us to really “Fully manage” we will but arranging access, chasing up quotes, arranging times to go in, release of keys maybe meeting tradesmen at the property all takes take and ultimately money.

    Where we will never have a mark up is on the little things like washing machine repair or new locks.

    #23068

    Anonymous Agent
    Member

    We do not add anything on to invoices but we do have set fees for certain things such as Gas checks, boiler services, legionnaires risk assessments, EPC’s, key cutting & smoke alarms. We do this to make it easier to confirm costs to landlords, because we use various tradesmen to carry out the work which charge in different ways. I don’t want the hassle of getting a quote for cutting 2 keys and then having a landlord say they can get it done cheaper at a place several miles away or even in another part of the country.

    #23069

    David Clark
    Member

    Never ever loaded contractors invoices or asked them for a kickback. I’m aware that some large competitors do and have been told by contractors that it is a condition of their continuing to receive work. Unless disclosed to landlord clients it is a ‘secret profit’ and a breach of the Estate Agents Act

    #25026

    basher52
    Member

    We are a local independent, we’ve never charged any extras on a contractor invoice. The client pays what the contractor invoices.

    I know several of my competitor do, of note one independant who gets the contractors to invoice a different company and of course a certain large ‘nation’wide corporate chain.

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