Saving a dollar is universally appealing, but when it comes to selecting a property manager, the allure of the cheapest option may lead to unforeseen costs. A low-cost agent could end up being a more expensive choice in the long run.

Agency Resources

Opting for an agency with low fees may seem financially prudent, but it's vital to consider the impact on service quality. Agencies contend with various overhead costs, from stationary and software to office space and staff salaries. If an agency charges low fees, it might lack the resources to adequately staff their property management team. Overworked property managers overseeing numerous properties are prone to errors and may struggle to provide a high level of service. In contrast, a property manager handling an appropriate number of properties can offer superior service, minimizing stress and ensuring attention to detail.

Effort and Motivation

Low fees often correlate with poor compensation for property managers, resulting in diminished motivation and service quality. A well-paid property manager is more likely to invest effort in serving you and your property. Motivation is evident in the contrast between an unmotivated agent passively observing an open inspection and a motivated agent actively engaging with potential tenants, gathering essential information.

Business Stability

Low fees translate to reduced income for an agency, potentially leading to financial challenges, high staff turnover, and the need to sell assets, including the rent roll. In property management, the sale of the rent roll could lead to your property management being transferred to a new agency without your explicit consent.

Level of Service

Service quality is directly tied to agency fees. Reasonable fees are indicative of a commitment to providing high-quality service, encompassing tasks from detailed reports to legal representation. The distinction between a cheap and a quality agent is apparent in the dedication to professional standards.

The Cost Difference

Rather than relying solely on quoted percentages, it's essential to assess the actual dollar amounts when comparing costs. For instance, if a property's monthly rent is $2000, and one agent quotes 5.5% while another quotes 7.7%, the 5.5% agent will cost $110 per month, whereas the 7.7% agent will cost $154 per month. This represents a difference of $44 per month or $11 per week. Consider that the 5.5% agent manages 200 properties, while the 7.7% agent manages 120 properties. Given the information in this article, the choice between the two becomes evident. 

In Conclusion

Choosing a property manager extends beyond the upfront cost. Carefully evaluate factors such as service level, staff motivation, and agency resources. Opting for quality over cost ensures a smoother, more reliable property management experience and avoids potential headaches down the road.