For too long, property managers have been whinging about other property managers offering low fees or heavily discounting to win business. We continue to complain about this without doing anything about it. Why are property managers lowering their fees? Is it because they feel they are not worth the fees they ask? Are they desperate to grow their portfolio? In my experience, lowering property management fees only lowers the client’s opinion of you, and it also creates long-term problems with the client, property, tenant, and your reputation.
At a recent property management meeting I attended, this was the main topic of discussion with the other agents in attendance. Jo-Anne Oliveri from ireviloution intelligence said that educating your clients on property management is essential to combating other agents discounting fees. Ranita Patel, the 2013 Real Estate Institute of Queensland Residential Property Manager of the Year, also added that there needs to be a level of understanding, respect, and consistency not only within the property management industry, but also from our landlords, to recognize that fees should not be the major deciding factor. If a property manager is able to provide exceptional service and have in-depth industry knowledge, along with achieving a great return for their investment, management fees then just become something you pay for receiving the above.
In my humble opinion, knowledge is power; and therefore, if clients have the knowledge, then they have the power to make informed decisions about the service they want—and that’s not based on simply a fee structure. Many of my clients have stated that when it comes down to it, they don’t shop on fees. What they really want is a high level of service. Other agents discounting fees make them compromise on this in the short term; but in the long term, it ends up backfiring on them, and they end up going with the agent that delivers on service.
What Do We Do About It?
What are property managers worth, and what should we really be competing on? The answer is simple: Let’s all compete on service, not fees. In other words, who is the best agent for the job based on their market knowledge, track record, and service standards?
How do we standardize fees? A previous post, Setting Your Property Management Fees, demonstrates the importance of knowing your competition, your point of difference, your product, your service, and more importantly, your worth when it comes to property management fees.
Furthermore, if you look at the opportunities in your market, you can be sure that there is enough business for everyone to share; so why do we bicker and slander between agents, cut fees, and discount to win the business? Isn’t that bad sportsmanship?
Why not look at it like this: How do you treat your follow sportsman? When I’m on the dock waiting for my ski or sitting on the bench, I share a laugh with my competitors without any judgement or malice; so why don’t we do this with other agents? Let’s work together to create more consistency in our industry rather than fighting against each other, which is just ruining our reputation.
If we took this approach, then we could band together to support each other and our community and create the consistency that’s needed across different agencies. Then, we’ll have the strength to encourage the agents discounting their fees to have more self-worth and standardize fees across the board.
Who’ll start doing it? I will! How about you? Please leave a comment below.
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