Our Secret Survey - The Fee Trap
The secret shop...
Last week our office conducted a little secret survey of our 15 competitors to find out the average fee charged to manage residential property in the Launceston area. While we will always maintain that the fee is irrelevant given there are so many variables that effect the overall income and expenses, it was a very interesting project and we thought you might be interested in the results.
To good to be true...
If a real estate discounts fees easily or offers a great deal, remember the old saying if it is to good to be true, it probably is! The most surprising fact that came from the survey was that while the management percentages varied from 8% - 15% the difference in dollar terms was minimal, less than an average weeks rent over a whole year!....how can this be true I hear you say? Well, it took a little research but when you know what questions to ask you will eventually unfold the truth when you calculate all of the extras such as lease renewal fees, advertising fees, court appearance fees, statement fees and more. One particular agency offered what seemed to be two different packages, an "all inclusive package" at almost 15% or a package at 10% plus extra's...guess what? They both calculate at the same dollar value over 12 months!
Kick you while your down...
You will love this one! If your tenant falls behind in rent and damages your property, you will no doubt want to issue a notice to vacate and if they refuse to leave, your agent will, or should arrange a court order for vacant possession. This process can take weeks, sometimes months if your agent gets in wrong, so how would you feel if the agent then advised you that not only have you lost thousands as a result of the tenant they selected, you will also be expected to pay them $100 per hour to attend the matter on your behalf!
The sale trap...
Another interesting discovery...with two particular agencies, if your tenant purchases the property from you at an agreed price, the managing agent will highlight to you that you signed a management agreement with some fine print that says you must pay the agency full commission on the sale, even if you negotiated it privately with the tenant!
The extra baggage...
I compare this method of securing business to a very recent experience with an "economy airline". I purchased a sale ticket without question because I thought I was getting a great deal, then when I arrived at the airport I discovered that I had to pay for extra baggage, my flights were delayed 3 times, a trip that was supposed to take 3 hours took 10 hours, then came the 2 km walk in the freezing cold to collect the baggage between connecting flights, only to find that check in was closed and I had to wait an hour to dump my suitcase. The food was expensive and tasted a bit like rubber and the flight attendants were rude and looked like they wanted to be somewhere else. As for the flight, I was on the edge of my seat the whole time wondering if I was going to make it! The whole experience was exhausting, I found myself wishing I had paid the few extra dollars from the beginning to the airline that offered reasonable rates, who had a reputation for being efficient and convenient with no hidden costs, one that had me arrive at the destination on time without the stress so that I could enjoy my holiday from start to finish! Sound familiar?
Summary...
After over 15 years managing properties I have seen how much a property owner can suffer simply by choosing an agency based on fees without considering the impact of poor systems and service and without looking carefully into the real cost of management. I suggest that you invest in a property manager that has experience, reputation and one that you believe will provide you the very best return on investment! In case you were wondering, that's us!