As a long-term business owner, I understand the importance of running a business, employing staff – and, of course, making a profit. In my role as a property management consultant, I interact with many offices and the common theme that has emerged in my talking to fellow industry practitioners is that we do not earn enough for what we do in our day-to-day lives as property managers and principals.
It appears that some agents and property managers are willing to negotiate their fees and commissions to secure business. Not all business is good, however. I have heard, on my travels, of some very strange structures being offered and it never ceases to amaze me how we can cheapen our industry by doing this and, in the process, work for next to nothing.
I really believe that there are some landlords out there laughing at us for what we do for them for very little or no charge at all.
Recently, I met a landlord in Melbourne at a conference (not a real estate conference) and she explained how she has two investment properties in Adelaide and has them managed for $10 per week. She told me that the property manager sends her inspection reports and end of month statements; pays all her bills for the properties; arranges all the repairs and maintenance; inspects the work after completion; and even sends through photos.
At tax time, this investor continued, she takes in her statement to the accountant and claims the agent’s fees and commission in her tax return.
I really believe we need to have a good hard look at ourselves. Yes, it could be scary for some to see what we actually do in our role as property managers.
My motto is if you are doing a job that can legally be charged for, then charge for it! The responsibilities that a property manager and principal have to deal with today are huge – and forever growing compared with the industry 10 years ago.
The duties today’s property manager carries out include (but aren’t restricted to):
Showing properties to prospective tenants
Dealing with increasing conflict
Filing entry conditions reports
Negotiating tenancy agreements
Conducting routine inspections, reporting back to the owner
Conducting bond inspections and final inspections
Handling insurance claims (including for natural disasters)
Meeting insurance assessors and arranging repairs
Preparing the files for tribunal cases
Arranging repairs and maintenance
Communicating with landlords, tenants, tradespeople etc
Sending out breach notices
Following up, following up and… following up
Maintaining a working knowledge of relevant legislation
It isn’t feasible for agents to discount or to not charge for a professional service. So, with this in mind, I believe fees should include:
- Letting fees
- Rent collection and management fees
- Tenancy renewal fees
- Routine inspection fees
- Repairs and maintenance fees
- Mediation and tribunal fees (charged at an hourly rate)
- Administration fees
- Advertising (internet, photography)
- Reimbursement for title searches
- End of financial year statements
You should also have a section for ‘other fees’, so ask yourself, what else are you doing that you can charge for? If you are providing a service, and it is legal to charge for it, than update your agreements and/or authorities to reflect the increase.
With the new financial year almost upon us, it is a great opportunity for a change. I would suggest an office meeting with the team to look at your fees, commissions and other charges, and then to set up a new agreement/authority reflecting what your new charges are.
Then stick to it.
A lot of principals believe they will lose business if they start charging more for their services, but from my own experience – and from the experience of others whom I train – that is not what happens. Agents need to look at how to sell the fees, commissions and charges to a client. Explain to them what they receive for their money – it is all about communicating with your clients.
I believe it is time for real estate companies to start running their property management departments as businesses. I have with my own agency and have seen firsthand the positive impact it has made to the bottom line.
You can too.