Renting your house with an agent generally costs 50 to 100 percent of the first month’s rent as a one-time placement fee, plus 8 to 12 percent of the monthly rent if you want the agent to keep managing the property after move-in. Before you sign anything, you will need to confirm your mortgage allows a rental, switch to a landlord insurance policy, gather ownership and disclosure documents, and review a management agreement that spells out exactly what the agent handles on your behalf.
Check Your Mortgage and Insurance First
Many conventional mortgages require the home to be owner-occupied. Converting to a rental without telling your lender can violate the loan terms. Some servicers accept written notice; others may require refinancing into an investment-property loan. Read your mortgage documents or call the servicer before you list.
You also need to swap your homeowner’s policy for a landlord policy, sometimes called a rental dwelling policy. Standard homeowner’s coverage is written for owner-occupied homes and generally will not pay tenant-related claims. A landlord policy covers the structure, liability for injuries on the property, and lost rental income if the home becomes uninhabitable. Make the switch before the listing goes live so a later claim isn’t denied.
Documents Your Agent Will Ask For
The agent has to confirm you own the property. A recorded deed or a current property tax bill will do. You should also provide the declarations page of your landlord policy so the agent can verify the coverage applies to rental use.
If the home is in a homeowners association, hand over the CC&Rs (Covenants, Conditions, and Restrictions) and the HOA bylaws. These spell out rules on pets, parking, minimum lease terms, and other restrictions the agent has to disclose to applicants.
Expect to complete a Form W-9 so the brokerage can report rental income to the IRS. You provide your Social Security number or Employer Identification Number on the form.1Internal Revenue Service. About Form W-9, Request for Taxpayer Identification Number and Certification The brokerage reports rent of $600 or more paid to you on Form 1099-MISC.2Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC
You will also fill out an owner’s disclosure covering the roof, plumbing, HVAC, and any known defects. If the home was built before 1978, federal law requires you to give prospective tenants an EPA-approved lead hazard pamphlet and disclose any known lead-based paint or lead-based paint hazards before the lease is signed.3Office of the Law Revision Counsel. 42 USC 4852d – Disclosure of Information Concerning Lead Upon Transfer of Residential Property The implementing EPA regulation also obligates your agent, acting on your behalf, to make sure these disclosures happen.4eCFR. 40 CFR Part 745 Subpart F – Disclosure of Known Lead-Based Paint and Lead-Based Paint Hazards
Round out the file with a property data sheet: exact square footage, whether utilities are gas or electric, which utilities are tenant-paid, and an inventory of appliances that stay with the house.
What the Agent Actually Does
Once the paperwork is in, the agent markets the property on the Multiple Listing Service and third-party rental sites, schedules showings, and screens applicants. Screening typically includes credit reports, background checks, and employment and income verification. A common benchmark is requiring the applicant’s gross monthly income to be at least three times the rent.
You can hire an agent for placement only or for ongoing management. Under a placement engagement, the agent finds a qualified tenant, drafts the lease, and hands you the keys. Under ongoing management, the agent stays on as the point of contact: collecting rent, coordinating maintenance and emergency repairs, enforcing the lease, and delivering legal notices, such as a notice to pay rent or vacate, if the tenant falls behind. Management companies also keep records of maintenance invoices, rent payments, and security deposit activity, which simplifies your tax filing and helps in a dispute.
What It Costs
Agent compensation breaks down into several distinct charges. Knowing each one lets you project net income before you sign.
- Lease-up, or placement, fee: a one-time charge for finding a tenant and executing the lease, typically 50 to 100 percent of the first full month’s rent. In some markets it is calculated as 6 to 10 percent of the total annual lease value instead.
- Monthly management fee: applies only under ongoing management, usually 8 to 12 percent of the gross monthly rent collected.
- Setup fee: a one-time administrative charge of roughly $100 to $500 for file creation, digital onboarding, and initial inspections.
- Lease renewal fee: when a tenant extends beyond the original term, commonly $150 to $300 flat.
- Maintenance markup: some management companies add 10 to 20 percent on top of third-party repair invoices. Ask before you sign.
These charges are normally deducted from collected rent before the balance is forwarded to you. Rent and security deposits are held in a broker’s trust or escrow account, separate from the brokerage’s own funds, until they are disbursed.
The upside on cost: nearly every dollar you pay your agent is deductible as a rental expense on Schedule E. The IRS lists management fees, commissions, advertising, and legal and professional fees among deductible rental expenses.5Internal Revenue Service. Publication 527, Residential Rental Property Your placement commission, monthly management percentage, and any fees for legal notices or eviction filings all reduce your taxable rental income.
Fair Housing Rules You Inherit
Hiring an agent does not shift Fair Housing responsibility away from you as the owner. The federal Fair Housing Act prohibits discrimination in the rental of housing based on race, color, religion, sex, familial status, national origin, or disability.6Office of the Law Revision Counsel. 42 USC 3604 – Discrimination in the Sale or Rental of Housing Many states and cities add protections for categories such as sexual orientation, gender identity, source of income, or age. Your agent must apply the same screening standards to every applicant and keep preference language out of listings.
Two areas trip up owners most often. First, assistance animals. Even with a no-pet policy, the Fair Housing Act requires reasonable accommodations for assistance animals, including emotional support animals, when a tenant has a disability-related need. An assistance animal is not a pet, so you cannot charge pet fees or pet deposits for one. You may request reliable documentation if the disability-related need is not apparent. Denial is limited to narrow situations, such as when the specific animal poses a direct threat to health or safety that other accommodations cannot reduce.7U.S. Department of Housing and Urban Development. Assistance Animals
Second, criminal background screening. HUD guidance recommends that screening policies differentiate between offenses by nature, severity, and how recently they occurred, and that applicants get a chance to provide context or evidence of rehabilitation. Blanket bans on anyone with any criminal record carry significant fair housing risk.
What to Look for in the Management Agreement
The agent cannot act for you until you sign a property management agreement or rental listing agreement. Read it before signing, and look specifically at these provisions:
- Scope of services. Confirm whether the agreement covers placement only or ongoing management including rent collection, maintenance, and lease enforcement.
- Fee schedule. Every fee, including placement, monthly management, renewal, setup, and maintenance markup, should be listed with the exact amount or calculation.
- Maintenance spending authority. There should be a dollar threshold above which the agent must get your approval before authorizing a repair, with emergency authority addressed separately.
- Term and termination. Note the contract length, the notice period to cancel (typically 30 to 90 days), and whether an early termination fee applies.
- Liability and indemnification. Understand how risk is split, and confirm both parties carry appropriate insurance.
Once you sign, you hand over keys, garage openers, and access codes. The agent schedules photography and launches the marketing campaign. Keep a fully executed copy; it is the document that authorizes the agent to deal with tenants on your behalf.
Ending the Relationship
If you decide to change agents or take over yourself, start with the termination clause. Most agreements require 30 to 90 days’ written notice. Some carry an early termination fee; others let you cancel without penalty as long as you give the required notice.
At transition, your current agent should transfer tenant files, the lease, maintenance records, and keys to you or your new agent. Security deposits held in the broker’s trust account have to move as well. Those funds belong to the tenant until properly applied or returned, and mishandling them creates legal liability for you. Get written confirmation that all funds and documents have changed hands before the old agreement ends.