RRP fee changes – Getting it right

RRP fee changes –Getting it right

The increased workload involved in residential property management has caused many members to review the fees being paid by rental providers.

For real estate agents, increasing fees is not as simple as it is for many other service providers, as the Estate Agents Act has onerous provisions which must be complied with.

Section 49A states that an agent must not obtain or seek payment from a person for work done or outgoings incurred unless:

• The agent has an authority signed by the person or their representative; and

• Before the person signed the authority, they were informed that the amounts of commission and outgoings to be paid to the agent are subject to negotiation; and

• Details of the agreed amounts are contained in the authority; and

• If the fee is to be calculated as a percentage, the authority must contain a statement of the fee both as a percentage and a dollar amount payable on the reserve price or any other relevant amount in the authority; and

• A rebate statement in a form approved by the Director of Consumer Affairs is

included in the authority; and

• The rebate statement in the authority includes a statement that the agent is not entitled to retain any rebate and must not charge an amount for any expenses that is more than the cost of those expenses; and

• The authority contains a statement in a form approved by the Director Consumer Affairs Victoria as to where a complaint concerning commission and outgoings can be made; and

• The agent gave the person a copy of the signed authority.

These requirements cannot be avoided even if there is an agreement between agent and client to operate in a different way. This is serious business, a few years ago a Court ordered an agency to refund over $3 million in commission because it didn’t have proper authorities in place. Sending a notice of a fee increase will not suffice, you’re required to negotiate with each client for a new authority.