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Discounted management fees 'insane'

26 June 2014 Elyse Perrau

A senior property manager has said agencies are increasingly using discounted management fees, which are working property managers into the ground for little to no return.

The comment comes after another property manager said they are the “most underpaid in the industry”.

Harcourts senior property manager Samantha Riley, a finalist in this year’s REB Awards for Property Manager of the Year (metro), said they are doing extensive training in their office around getting their property managers to believe they are worth more.

“We don’t want to fall into the category of other agencies, where we are just dropping everything to a low fee and working our managers into the ground and not making any money on it,” she told Residential Property Manager.


“But there are so many around that do it. It is a really big problem at the moment.

“We find that a lot of the agencies that are doing it are the independent ones rather than the franchises, because obviously the franchises can work off their brand to secure some of their business whereas the independent companies are trying to work their way up,” she added.

Ms Riley said with the large amount of competition in the property management market, some agencies are charging “6.6 [per cent] all-inclusive management fees”.

“At the end of the day, your business is not going to make any money from that but they are doing it just to try and secure that business, so they are just throwing their rent roll and it is quite insane,” she said.

“We are trying to shy away from it because at the end of the day, [our property managers] are worth more than just discounting fees to get business.”

Ms Riley said her office is trying to use other avenues, such as promotions, to secure business but it is very hard when agencies around them are dropping their fees as low as they can.

“On average at the moment, there are agencies around us doing around 7.7 to 8 [per cent]…it makes it harder because then we have to try and negotiate our fees to get the business. But at the end of the day, if you negotiate too much, you are not making any money on it,” she said.

“Property managers' services are worth more than the lowest management fee you can achieve to get an extra property.”  

Discounted management fees 'insane'
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