Evolving into a property management adviser who communicates proactively is a prerequisite for PMs to retain owners over the long-term, according to a property management professional.
REB’s Alex Whitlock sat down with Alistair Shearer, partner and head of property management at Belle Property Mornington and Mount Eliza, for the Property Management Excellence (PMX) Podcast to explore the human side of property management for an agency.
They uncovered how turning the property manager-owner relationship from transactional to advisory could enable property managers to create long-term and trusted relationships with their customers.
Shearer said the only way property managers could demonstrate their value proposition is by communicating frequently with owners and proactively sharing their expertise on their property.
One of the fundamental issues, he noted, is that some property managers only communicate with owners when there is a problem with their property and/or tenant.
“It’s not proactive communication in general,” Shearer pointed out.
“We tend to call them when there’s a maintenance issue or when their tenant has gone into rental arrears. We call them at the bad points.”
Property managers could potentially shift this mode of operation by proactively communicating with owners about how they could reap more benefits out of their property investment.
For example, property managers could conduct rent reviews and contact the owner about increasing their rent in line with rental market trends.
In addition, property managers could identify opportunities for renovation or home improvements to boost the value of the property.
“If you’ve just conducted a routine inspection at the owner’s property, tell them that you’ve noticed this, this, and this. If you were to spend maybe $10,000, upgrade the bathroom, do some renovation, some minor renovations, you could see a result looking more like this,” Shearer suggested.
“That’s where it starts to come back to shifting the relationship from this bad news reactive to: ‘This is my property management adviser. They’re telling me what I need to do to make more money.’”
Roadmap of initial conversations
In the podcast, Shearer shared how he conducts initial conversations with a new client. He said he and his team have face-to-face conversations for up to two hours with the owner to explain the property management process.
“It’s more about building that relationship, [giving] them the confidence that you know what you’re doing and addressing any concerns that they might have,” Shearer said.
He added that it is critical for property managers to understand the owner’s long-term investment goals with the property.
“Have they just got it on the market to sell it in 12 months’ time? Are they building a portfolio of 10 or 20 properties? If we have an understanding of [their goals] upfront, that will change how we handle different situations and how we advise them in different elements of the process.
“They might have had a friend who had something horrible happen on their property. We need to know about that. We need to explain how that won’t happen under our management because of the processes and systems that we have in place that address that proactively, not reactively.”
Communicate your value to retain owners
In a recent conversation with a new client, Shearer said he articulated the services and value he would provide as a property manager. This included the advertising and leasing component, the property management process during the lease, and the steps he would undertake towards the end of the lease, such as reviewing the market, ascertaining the tenant’s intentions, and communicating that to the owner.
“Then we work out the strategy from there, whether we need to be re-leasing the property and so on,” Shearer said.
At the end of the conversation, Shearer said he disclosed his fee of 7.7 per cent, highlighting that the client expected a higher fee due to the level of service.
“I was quite shocked at that comment. You just need to make sure that you explain [your services] to them and articulate the value. They will pay for it. They see the value in it,” Shearer said.
Failure to articulate the value could result in the owner moving to a cheaper agency, he warned.
“We look at it and go, well, why did they move? [It’s because] they didn’t see value in your agency,” Shearer said.
He concluded: “If you’re looking after your clients, they won’t leave. There’s no reason for them to leave. Make sure that [the owners] feel like you’re working for them”.
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