Posted by Michelle Discount Property Management Fees

The familiar saying ‘you get what you pay for’ is true. In property management, there is a vast difference between the quality of service that is given, which can be as varied and different as the levels of fees that are charged. However, we need to understand that should we as an agent offer cheap fees, we also need to understand that we must expect this action will eventually convert into unsatisfactory service levels. How is this so? Here is a simple step by step analysis of how cheap fees convert to poor service.

The boss said that we must do whatever it takes to get the business. Therefore, when the property manager is challenged about their fee, they are quick to drop it by 1-2% off the standard management rate, or they waive other fees altogether, like letting and lease renewal fees.

The property manager is overloaded with properties

Because the agency now has a much lower revenue base to work from due to their cheaper fees, the property manager assigned the property has a high volume of properties to manage than what is possible and feasible.

Burnout and resignation

The overload causes the property manager stress and inefficiency and they simply won't cope, resulting in ‘burnout’, lowering service levels and most likely resulting in a resignation.

Inexperienced property manager employed

The agency must then employ a new property manager. It is likely that a well experienced property manager is hard to find, therefore resulting in the employment of a low or inexperienced property manager. Even if a good property manager was located, they may not want to take on the role because they can see that they will be overloaded with work.

The cycle of staff turnover

The overload of properties is too much for the new property manager to deal with. Low revenue levels also result in little to no training and the new property manager has likely been ‘thrown into the position’ and a resignation quickly ensues. The cycle of high staff turnover is the result.

Poor service level

Due to high staff turnover staff are untrained, inexperienced and overloaded. This results in poor communication, shortcutting important risk management procedures, costly mistakes and ultimately highly dissatisfied clients.

The Principal blames the industry

The principal now disillusioned by their ‘poorly performing’ property management department, tells others how difficult property management is, reinforcing the popular notion that the property management department is still ‘poor cousin’ to sales in a real estate company.

As an industry, we do not need to use something as ‘primitive and common’ as having to discount our fees just to get new business. Let’s keep property management at a new level of professionalism and add value back to our clients and customers.


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