On the week end I read an article in the real estate section of the local paper. the Gold Coast Bulletin. In brief, the article was about an accountant-cum-real estate agent who has opened an office and to attract clients immediately is offering an extremely low commission (to the point of ridiculous!).
I never really take the time to respond but I am so passionate about improving the image of our industry that I just had to take a moment (compose myself) and write to the Property Editor to let her know why property management fees should not be negotiated.
Let me know what you think ......
Dear Barb,
I read your article in the Bully (Gold Coast Bulletin) on Saturday and have just had to respond. No doubt you were inundated with passionate property managers and principals giving you their “2 cents worth” regarding your article on Neil Hart and the commission he is charging.
Here’s my 2 cents worth ....
Where have all the good property managers gone?
There are 2 types of stress. Stress that comes from dealing with landlords financial investments and tenants living space. The second type of stress can be much reduced or eliminated and is generally in the control of the principal and property managers. This stress is often self inflicted due to, not only poor work habits, but also to working conditions not conducive to an efficient work environment.
I believe more and more that property managers must reduce the amount of properties they can competently manage compared with, say, 10 years ago. With increased duties and regulations comes increases in compliance to the ever changing legislation. This means the ratio of properties to staff member must be in balance. Good staff don’t come cheap and the increased cost of compliance is a significant factor when calculating fees and applying the service. Where the fees match the level of service you can certainly compare the difference in agents who know their business and their figures compared to an agent who believes in quantity over quality. These days client and tenant demands seem to accelerate faster than the level of service that can be provided.
To bring systems under control eliminates costly errors that require 2-3 more times to fix later becomes a reactive complex problem. Bringing time systemisation into the mix we get a greater efficiency, a more successful outcome and happy clients, tenants & staff.
A principal must take an interest and care in the staff they employ and the clients they work for. Staff want to work with a principal who cares about them and about property management in particular. Principals who still treat rentals as the “poor cousin” just won’t cut it and will not only repel good property managers but also attract incompetent property managers that will cause them and their clients only harm.
The balance is not there when you have loads of properties but can’t afford to engage quality staff because the fees are not being generated to cover the most basic expense i.e. wages. I know property management is his sideline business and main focus is elsewhere but when agents do this to gain business it only serves to harm the agents who are not in business to skimp on fees.
I can’t speak for other people but our property management business is based on quality of clients and their properties, working with quality staff providing a quality service. I can’t do this on a shoe string budget. I know this from experience and my accountant has also reinforced this every year at tax time.
Be very wary when an agent cannot even negotiate a good wage for himself let alone run a good business. How can he possibly negotiate a good rental return on the clients investment? This type of justification on fees only serves to seriously harm the industry where the reputation mostly teeters on the edge anyway.
I did like your wariness – good call!
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