When I was on the front line, running a full-service real estate firm, I would be the point person on all new business calls. The first question from a potential client would almost always be, “How much will you charge to manage my property?” or “What percent will you charge to manage my property?”
It was a frustrating position to be in, but one that was easily answered: “There’s no fixed quote to manage your property.” Of course, the argument would be that they called several other management companies and were quoted X or Y. But no matter what, I learned that providing a quote to anyone on the phone is a slippery slope, and a very dangerous approach to gaining new business.
Two things are certain: No two properties are alike, and no two property owners are alike.
Based on years of experience and knowing these basic fundamentals, I would always learn about the property and client before offering any opinion on what the cost would be to manage their property. Why? Since I could not possibly know the scope of service required for a property without a site visit and further investigation into so many pieces of information, quoting a fee over the phone would do the client and my firm a disservice. However, it was a balancing act on so many different levels—I would have to keep the client interested enough in my answer and approach as to why just quoting a figure may not be in the best interest of the management company and hence the client.
To calculate a management assignment quote and determine what should be included, you must have a good handle on what your overhead costs are as well. If you have unit costs on your overhead, it’s much easier to simply create a matrix of unit items and then calculate the labor hours that relate to those functions.
The functions can be general categories like:
- Account management
- Property manager
- Capital project management
- Legal advice
This is a sample list of functions; some of the functions may or may not apply to the scope. For instance, the owner of the building may pay and secure property insurance or use their own real estate tax attorney. Although that may be a red flag for smaller property owners, for large clients, it may be that they put their insurance out to bid as they have a risk management department to handle that work. Or they have an in-house legal department. These are important areas to consider, and understand that these tasks take time. And remember, time is money!
I think you get the drift here, but the main points are that no two properties are alike and no two property owners are alike. If you keep that in mind, you will be able to identify clients that understand your value and your concern to do the job right, rather than just provide a proposal blindly, without knowing how it will impact their company and the overall health of the assignment.Read more on Scaling