I have heard a lot of "stories that touch" where a client pays for a house and for some unforseen circumstance , the client is unable to proceed with the tenancy of the property he or she paid for and thereby they are refunded the full house rent but the legal and agency fee isn't refunded. Reason they say is agency fee and legal fee is not refundable. Policies like these, make potential clients scared to work with agents and that affects the real estate business.

I found myself in such situation recently and I funded the client back the full agency after more than a week of payment. I had spent the money already but in my mind thats not an excuse not to refund a clients money. It wasn't the clients fault, the landlord didn't want her and refunded the rent, there was no legal fee so it was up to me to refund the agency which I did with no obligation. If the client had been the one to change her mind, then I probably wont have refunded the agency but give her another house.

However a number of people who work in the first and some who dont even work in the field were against it. That under no circumstance should agency or legal fee be refunded. I tried to explain to them that the reason for the swift refund is because the client might find another house that same day through another agent, why make her suffer because i want to chop agency fee. They used a big real estate firm as example, the name of the company I will not say but he said they dont refund agency or legal fee but give them an alternative which makes sense but what if the client is happy with another agents house and the house is hot in the market, it could go any minute. Because of this "no refund policy" a lot of clients have lost different opportunities to pay for their new house on time.

To all the real estate agents, realtors etc, if its not the clients fault that a transaction went wrong, refund their agency fee and maintain your integrity. The client shouldn't pay for a service that wasn't provided. There are a lot of more benefits when you refund the agency fee if it was the landlord or co-agents fault.

This is what I intended to say. Most estate agents think the 'agency fee' is earned by just showing the client the house at arms length and that's it. They never seek to add any value whatsoever to the transaction. So whether the client is settling down fine in the apartment thereafter or wants a refund for whatever reason, it is not their business. It is not good professional service. The agency fee is properly earned when a prospective tenant is in full possession of the apartment. Beyond the client just getting possession, agents should seek to add value for instance by compiling an inventory of the apartment, reviewing the draft tenancy agreements e.t.c.

Regarding the situation you described, if you had screened the tenant properly, while being guided at the same time by what the landlord's preferences where, I am not sure you would be in that situation.