One of the Costliest Mistakes a Landlord Can Make
We at Simply Let are good at what we do: We know the Inverness rental market inside out, are careful in selecting responsible tenants and, because of that, are able to return tenants' deposits in full in 85% of cases. We have never had a property vandalised or deliberately damaged, and have never had to take a tenant to court. We have never, in the 14 years we've been in business, lost a landlord a penny in rent. We receive glowing Google reviews from both landlords and tenants and were this year nominated as a finalist in "The Herald Property Awards - Best Residential Letting Team" category. We are good at what we do.
Most landlord clients are content to leave us to get on with the job they are paying us to do but, every so often, we come across a situation where a landlord, although paying for our expertise, declines our recommendations in relation to rent level and directs us to market a property at a level which we know is unlikely to attract a tenant. "You can always reduce it if there's no interest". Indeed we can, but to an astute market the property is seen to be "hanging around" and then being reduced in price and so the perception can arise that there must be some inherent fault with it and, a bit like the second-hand car market, it can come to have an aura of "something not quite right". Promoting it on social media and so on in an attempt to stimulate interest can, if overdone, be counter-productive for the above reasons. We aim to set rents which will optimise the performance of clients' properties, but ultimately our role as agents is to implement our clients' instructions, provided they are lawful, and so in such situations the client's wish is paramount.
Looking at the maths, it quickly becomes clear that going to the market at too high a rent makes very little sense: If a property which would let reasonably quickly at £925/month is marketed at £1025 then its landlord is foregoing £925 for every month it remains unlet. After 3 months that's £2775. If it secures a tenant after 3 months having been reduced to £950, then for the 12 month period since marketing commenced the landlord would receive £8550 (9 payments of £950) whereas if it had been let within a month of marketing at £925 he would have received £10175 (11 payments of £925). And that's not taking account of Council Tax and utilty service charge liabilities.
As Apple CEO the late Steve Jobs famously said, “It doesn't make sense to hire smart people and then tell them what to to. We hire smart people so they can tell us what to do.”