Albany Prestige Realty

Insurance cover

You may also wish to ensure that you have adequate public liability insurance in case someone comes to harm on your property.

A related issue to discuss with your property manager is whether or not to fit the property with safety features like electrical safety switches, safety glass and smoke alarms.

As with any business transaction, it is important that you are clear in your own mind what exactly you require concerning the management of your rental property.

Some questions you should ask yourself about the management of the property include:

• How promptly do you wish to be told if your tenant is behind with the rent?
• Do you want to be consulted before any repairs or maintenance are carried out, no matter how small? Or would you prefer to be contacted only when the amount exceeds a set limit?
• How often do you want property inspections carried out on your property?
• For how long do you wish to engage the real estate agency, known as the period of agency?
• Do you wish to be involved each time a tenant is selected?

Aspects such as the above need to be agreed in writing, preferably in the Written Authority.

The Written Authority that you sign to appoint a real estate agency to manage your property for you is a legally binding contract. This means that both you and the real estate agency are obliged to fulfill the requirements of the Written Authority.

The Written Authority can vary between agencies, so it is important that you read the contract carefully. Negotiate then get it in writing!

The Real Estate Institute of Western Australia (REIWA) prints standard real estate contract documentation. The REIWA 2002 Exclusive Authority to Act as a Managing Agent for Residential Premises provides for you to specify the rental details for the premises, the period of agency, the payments the agent can make on your behalf using the rental monies collected, and your bank account details for depositing rental monies collected. The agreement also requires you to specify whether or not you agree to pay separate marketing and advertising costs. An agreed letting fee and management fee schedule must also be specified.

An agent may claim expenses from you that are related to their duties, such as photocopying and faxing costs, or reimbursement for repairs paid on your behalf. You should discuss these expenses with the agent before signing the Written Authority.

It is important to specify in the Written Authority the nature of these expenses, and clearly set out the method by which these will be calculated.

To avoid misunderstandings or problems later on, it is important to include in the Written Authority all agreements between you and your agent. You and the agent should sign and date any special requirements that are added to the standard contract.

For instance, if you have concerns about the deterioration in the condition
of the property, you should ensure that the Written Authority includes
a requirement that copies of all inspection reports and breach notices
for damage are sent to you. In this way you can keep track of the condition of
the property.

periodic property inspections carried out by the agency.

A letting fee, management fee and inspection fee are likely to be included in the Written Authority with the agent. As with any other service, these fees may be negotiated with the real estate agency, and you can shop around for better deals.

A letting fee is a fee for finding a tenant for your property. The Written Authority used by REIWA members includes a letting fee that is either a percentage of the total rent for the tenancy period, or a fixed fee for each new tenancy.

If the agency charges a tenant a letting fee (up to a maximum of one week’s rent) then the letting fee that you as the owner may be required to pay should be reduced by the same amount.

A management fee is a fee that covers the routine business of managing your property. The Written Authority used by REIWA members allows for a management fee that is either a percentage of the gross collections for the tenancy period, or a fixed fee per month/year. The term “gross collections” refers to the total value of all money collected from all sources, including rent, water charges, electricity and gas charges.

The Written Authority will also mention other fees and costs, such as charges
for preparing the property condition and final inspection reports, periodic
inspections, postage and other minor costs (including banking transaction
fees), attendance at meetings (including court appearances), marketing and
advertising costs.