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An industry coach has noted that cutting fees is leading to more property managers getting overwhelmed and burnt out.
Real estate coach John Highman told RPM that the practice of 'buying business' can induce burnout because it can force property managers to take on excessive workloads.
"Lowering fees produces more properties for the property manager, so they are overloaded with work and over time the property manager becomes ineffective, makes mistakes and potentially leaves the business," Mr Highman said.
When staff leave, that then leads to even more work for the remaining property manager, he added.
"Either way, the pressure will be servicing the clients and maintaining control of the portfolio," he said.
To address the issue, My Highman suggested looking at the volume of work per property rather than using a fee based on a percentage of income.
"While it's always convenient to charge a fee based on a percentage of income, before you set a fee, you've got to understand what that client will require and what services you believe should be offered so that you can keep the client happy over time," he said.
"It all comes back to the services offered, and if the fees aren't matched to that, then the property manager is going to have problems keeping up and that’s when they get overloaded," he said.
According to Mr Highman, signs of burning out include inability to control arrears and track maintenance accurately as well as facing preventable compliance issues and working long hours.
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