How to change real estate agents

How to change real estate agents

How to change real estate agents

Here is a big question I get asked by landlords:

How do I fire my real estate agent?

Switching property managers happens all the time and it’s not always because you’re unhappy with the service. You might be looking for something cheaper, looking to manage it yourself or moving all your properties to one agent for consistency.

No matter the reason, switching real estate agents or property managers is actually more straightforward than you’d think. There is still a little prep involved, mostly because every management agreement is different – although many use their state’s REI (Real Estate Institute) agreement.

Even then, many agents insert clauses of their own.

I’ve broken down the switching process into some key steps below.

Key steps

1.Give written notice (usually 28 days notice)

Sending a letter is fine but email is good too. In the letter state how much notice you’re giving, the termination date (switch over date), and this list of items you need to pick up on switchover day:

• The lease (and the original lease too if there has been lease renewals)
• Application form
• Keys
• Condition report
• A signed change of owner bond form
• A tenant ledger showing all tenant payments and paid to date.

If you need, also put the reason why you’re leaving.

2. Give the tenant the heads up

Be sure to let the tenant know when you’ll be switching over and to continue paying rent as per normal until the switch over date. You may not have their contact details so letter in the mailbox will work if you can’t get them from the agent.

3. Reminder to agent before switch over day

A day or two before the switch over day send the property manager a quick email to remind them about having the file ready to be picked up.

4. Pick up the file on switch over day

This is the list of items that you asked for in your letter of termination (Step 1) and you should expect all of this to be ready for you to pick up on the termination date.

5. Notify your tenant and set up rent payments

Once the switchover has occurred, now is the time to give tenants more detail. Specifically, they’ll need to know who their main contact is, what to do if there is a repair and most importantly how they should pay rent.

6. Update the bond

You’ll need to fill out a change of owner bond form (it’s called something different in each state) that the agent signed, and then submit it to your relevant bond authority this is usually done via post but the instructions are on the form. You should get a confirmation in two weeks.

7. Organise an inspection

A great chance for you or the agent to check out anything that needs fixing at the property and build a rapport with the tenant.

These are the key steps to switching over but I often get a lot of questions about the first step: how much notice do you need to give?

Well, there’s a straightforward answer but there are some details you need to know:

You usually need to give 28 days of notice when terminating your agent

However, although most allow you to simply give 28 days’ notice, some start with a contract period that does not allow you to terminate (without reason) before a certain date or number of days.

For example, the REIWA templated management agreement (WA) has a fixed start and end date. You may have signed for a fixed term of 2 years, like this one:

Tenants cashing in on airbnb

In which case you would not be able to terminate this agreement until Sept 2018 unless you can show that the property manager has failed to substantially perform their obligations under agreement (according to the REIWA standard agreement). For example:

• They didn’t perform any routine inspections
• No chasing up of late rent
• Lack of communication
• Didn’t follow up on urgent repairs
• Generally didn’t follow the rules set up in the agreement

However Queensland, for instance, they have a mandatory management agreement form that states you simply need to give 30 days’ written notice to end the agreement with the agent. No fixed term just a simple 30 days notice to terminate the management agreement. Perfect!

Tenants cashing in on airbnbSnapshot of the Property Occupations Form 6 QLD

You don’t have to wait until a tenancy finishes

Just because you’re in the middle of a lease doesn’t mean you can’t switch. Remember, the lease is between you and the tenant, but the management agreement is something between you and the agent. It has no effect on the tenancy. You also don’t need to sign a new lease agreement with the tenant.

If your tenants leave, the management agreement still applies

When tenants leave, you still need to give notice to terminate the agent’s authority to manage the property. However the notice could be effective immediately if the property is vacant, again just check the agreement to be sure.

However, if your tenants are still in the property and are about to leave you should just be a little careful as to when you serve notice. You don’t want the current agent to just pack up as soon as you give notice leaving you or the next agent to tie up their loose ends (final bond inspection and refunding of the bond etc).

Personally, I’d wait until everything is done and dusted before giving notice. The problem with this approach is, what if you need to start advertising for new tenants? Your can either get the agent to start advertising, or wait until this process is finished before advertising.

You still need to pay for advertising

Let’s say you give notice after the agent has started advertising already. You still need to pay for the advertising even if the agent does not find a tenant. Although you might have a valid argument if the agreement states advertising costs are payable only when a tenant is found, not just during the search.

Tenants cashing in on airbnb

This is an example of what an agreement is like where you have to pay all the expenses. REIV management agreement.

Whoever signed the management agreement needs to sign the management termination notice

Pretty straightforward. Anyone who signed on the original document needs to make sure they sign the management agreement termination notice.

That’s pretty much it!

The important thing is to really drill down into your own management agreement because each one will have different clauses. And if you have a fixed term (like many WA agreements) and want to break the agreement when the end date is near, talk about it with your agent and be transparent. Be sure you have a good reason if you want to get out early.

With that said, here’s that one extra thing we mentioned at the start that you should know when terminating a management agreement.

Most agents are helpful but…

I’ve had situations where agents don’t do anything after you give notice – in one extreme case not even recording the last rent payment!

In this situation, after the termination notice was sent, the agent stopped managing the property right away and didn’t tell anyone! They didn’t record a whole month’s rent payment, and then on the switch over day we found out the rent was two weeks overdue. And the tenant was on an overseas holiday! It took a further week for the agent to confirm they had actually received the rent payment from the tenant.

In a separate incident, we helped one landlord switch over 15 properties from their agent to Cubbi. We asked the agent for the tenants’ names, phones and email addresses to help with a smooth transition considering it was 15 properties – and they just flat out refused, even after multiple calls and very direct emails from the landlord.

Most agents are great. But you just can’t rely on them to help with a smooth transition, especially if they’ve only been average at their job beforehand.

Want another option?

If you’ve had enough of going from one agent to another, there’s actually a third option: Cubbi

Cubbi streamlines the entire renting process so you don’t need to use an agent. Cubbi will guide you through the whole switching process, create a termination notice, send it to your agent and even prepare a “getting started” pack for your tenant.

Just send in your management agreement and we can advise you on how much notice you need to give.

About Michael Gilbert

Co-founder & Joint CEO of Cubbi. Common Ground.

I started real estate in 2006 on the NSW Central Coast. Loved it but noticed too many owners and tenants were unhappy with the value most agents were giving or simply wanted another option that didn't involve doing it all themselves. That's how Cubbi came about.