Below is an interesting article I grabbed for you from Real Estate Business Magazine, I migrated to it because I am constantly talking to my property managers about how all business is not good business. I’m one of the agents who believes that 9 times out of 10 you can tell from the get go if a potential client is going to be a ‘potential problem’. One of my earlier blogs relates to some of the extremes both landlord and tenant can expect us as their property manager to undertake and this story directly relates to how it can effect a business profitability.
“Spending up to three hours a day dealing with problematic landlords will eat away at business profits, according to Leading Property Managers of Australia director Bob Walters.“As a property manager, dealing with problem landlords is part of the job, but if you find yourself spending up to three hours a day dealing with the same client, all profits made from their business will be completely swallowed up,” he said. With reference to Sydney, Mr Walters said average property management fees are approximately $1,400 a year, which breaks down to approximately $27 a week. In order to make a profit from a ‘problem’ landlord, agents may need to negotiate higher fees with their client to combat the large amount time and resources spent dealing with their concerns.“If you find your client is being unreasonable and taking up a lot of your time, most agents will attempt to negotiate with them and assure the client they are a professional that can handle the matter in an effective manner,” he said.“In dealing with my business, I have assessed our client base and identified the clients that continually take up several hours of our time. From there I will negotiate higher fees with my client and in some cases will terminate the contract if an agreement cannot be made.” These comments were in response to a recent Real Estate Business straw poll of 238 respondents where three in four agents (74.8 per cent) believed up 10 per cent of their property management business was made up of ‘problem’ landlords. REIWA property management network co-chairwoman Jenni Wood told Real Estate Business, agents need to thoroughly inspect the property and landlord prior to taking the listing. “The problem is a lot of agents spend a lot of time assessing a tenant during the induction stage, however spend little time assessing the landlord,” Ms Wood said.“If 10 per cent of your property management business is made up of trouble clients, agents will easily be spending up to 40 per cent of their time resolving these problems.”
The above story takes me back to a particular situation I had with a potential client… Let me paint the picture for you. We as Buyers Advocates purchased this property for the client, once the sale had gone through we submitted our proposal to take on the management; we sent through our authority to the client for review, as we don’t use the standard REIV authorities (we are members) but it’s easier for us to merge the document from our software than plug into theirs… anyway the authority is identical but the client asked me to email him an REIV approved one so he could compare notes. I advised him that the authority was a standard, legally approved and prepared document but this didn’t stop him from forwarding me approximately 15-20 holes he believed he had found in the agreement – I firmly advised him that I would not be amending the agreement and that legally I was unable to do so anyway…. We then moved onto my appraisal which of course was too low – his property was worth more!!! I provided ample comparables and informed him that we always aim for the best & highest price but an appraisal must be based on comparable lettings not what we are hoping for, we finally overcame all his objections and it was now 1 day prior to settlement (60 days had passed) coupled with a one on one meeting he finally he advised us that we were granted the business…. I thought about it all day and respectively declined (thank god) because 6 month late he emailed us threatening legal action because his tenant had just broken their lease… Apparently this was our fault because we should have known at the time we purchased the property that there was a tenant is the block who was housed by DHS, yes someone should have referred him to the Privacy Act! I feel sorry for the agent who ended up with this chap as their client as I’m confident he is threatening legal action to them also, it’s probably the agents fault that the tenant they put in got into a scruff out the front of the building, well – maybe it is, yet im sure the landlord would have approved the application first but let’s just blame someone else shall we.?