How Cheap Fees EQUALS Poor Service

Tuesday, December 05, 2023

The familiar saying ‘you get what you pay for’ is true, and in property management, there is a vast difference amongst the service and quality that is given, which is as varied and different as the levels of fees that are charged.

However we need to understand that should if we as an agent give cheap fees, we also need to understand that we must expect this action will convert eventually into low and dissatisfactory service levels and cannot be sustained.

How is this so?
Here is a simple step by step analysis of how cheap fees convert to poor service levels;

1. It starts with cheap fees- To get new business the boss has said that we must ‘do whatever it takes’. Therefore when challenged about their fee, they are quick to drop by 1-2 % off their standard management rate or even waive other fees altogether like letting and lease renewal fees.

2. The property manager is overloaded with properties-
 Because the agency now has a much lower revenue base to work from because of their cheaper fees, the property manager assigned the property has far more properties to manage than what is responsible and feasible.

3. Burnout and resignation-
 The overload of management causes the property manager to not cope causing ‘burnout’, lowering service levels, and most likely resulting in a resignation.

4. Inexperienced property manager employed-
The agency must 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 know they will be too overloaded with work.

5. 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 is likely ‘thrown into the position’ and a resignation quickly ensues. The cycle of high staff turnover is the result.

6. Poor service levels-
 Due to high staff turnover staff are untrained, inexperienced, and overloaded. This results in poor service levels, and dissatisfied clients.

7. The Principal lets others know-
 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 ‘second best’ to sales in a real estate company.

We need to understand that discounting fees is a point of difference and one that is the most easily copied by our competitors. There are so many other points of difference we can use to attract the prospective client to use our services, we do not need to use something as ‘primitive and common’ as having to always discount our fees just to get new business.

Let’s keep property management at a new and high level of professionalism with our fee-charging.

All the best!


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