• Yarra Glen Real Estate | Seriously Different Agents

A Cheap Property Manager Vs A Good Property Manager

A Cheap Property Manager Vs A Good Property Manager

Who doesn’t love to save a dollar? I know I do. But when it comes to choosing a property manager, cheapest is almost never the best choice. A cheap agent may end up costing you more than they are worth.

Agency Resources

An agency that charges low fees may look attractive to your hip pocket, but think about the costs they incur and how that could impact on your level of service. Agencies have many overheads to account for, such as stationary and supplies, trust accounting software, inspection software, office space, staff salaries, computers, phones, training, and the list goes on. Now think about this, if an agency is charging low fees, it’s likely they can’t afford the necessary number of staff required to properly manage their properties. A property manager with many properties will not have the time to provide a good level of service and may make mistakes as they are spread too thin vs a property manager that has an appropriate level of properties can provide a much higher level of service, be less stressed and have time to pay attention to detail.

Lower paid property managers who have many properties to manage also tend to “burn out” and either leave the agency in search of more money or a better work-life balance or leave the industry all together. When a property manager leaves part way into managing your property it can cause all sorts of issues such as missing information, lack of knowledge of your property and simply, the task of starting that relationship with you all over again.

Effort and Motivation

Agencies that charge low fees are quite likely to pay their property managers poorly. Guess what a great motivator for employees is? Money. A poorly paid property manager, as any poorly paid employee, is unlikely to be motivated and unlikely to put maximum motivation into servicing you and your property. A great example of this is the agent who stands leaning against the doorframe at an open for inspection, taking people’s names and simply standing there with no engagement with potential tenants, vs the motivated agent who really attempts to “sell” your property to potential tenants, engages and finds out important information about who you might end up leasing your property to.

An agency that charges low fees can also be a sign of their general feeling towards “property management”. A commonly heard phrase about property management and sales is “property management is the poor cousin of sales”. Agencies that hold this view often treat their property managers poorly, overwork them and generally don’t have respect for their profession. This, once again, causes a lack of motivation and a high turnover of staff.

Business Stability

Low fees mean low income for an agency. Low income can cause financial problems within the business, high staff turnover and the potential need to sell off an asset should times get really tough. In property management, the asset that may be sold off is the rent roll. The rent roll refers to the properties managed by the agency. This can be sold to another agency should this be required. In this instance, the management of your property is passed to the new agency, you don’t even have to give permission for this to happen. You can, of course, move your property to another agency, but this starts the process of finding a new agent all over again.

Level of Service

I spoke about level of service in my article “What Your Property Manager Should Be Doing For You”, but it very much comes into play here.

Simply put, an agency that charges reasonable fees will provide a good level of service, and agency that doesn’t will not. This all stems from the previous items in this article, staff motivation and turnover, agency resources and the importance and agency places on their property management department.

From simple things such as detailed inspection reports and condition reports and putting effort in when leasing your property to more complex things such as reviewing your landlord insurance cover and representing you at VCAT (Victorian Civil and Administrative Tribunal), the difference is obvious in property management between a cheap and a good agent.

A great example of this in another industry is in the building industry. A cheap builder may use cheap materials, cut corners, be working on too many projects at once and will in the end deliver a much lower quality result that could cost you more in the long run, where as a reasonably priced builder will use decent materials, not cut corners, be more focused on your project and will deliver a much higher quality result that will keep your long term costs down and you happier with the outcome.

The Cost Difference

The best way to look at cost difference is to work out the actual dollar amounts, rather than just relying on the percentages quoted to you by the agent.

Let’s take a look at a property that is $2000 per calendar month. You’ve met one agent that is quoting 5.5% and one agent that is quoting 7.7%. The 5.5% agent will cost you $110 per month, while the 7.7% agent will cost you $154 per month. This is a difference of $44 per month and $11 per week. The agent quoting 5.5% is managing 200 properties, while the one at 7.7% is managing 120 properties. For the difference of $44 per month and based on the information in this article who are you going to choose?

At the End of the Day

The whole point of this article is to assist you in making a choice that won’t cause you a headache down the road. Think carefully about the agent you choose and don’t simply go for the cheapest. What is their level of service? How many properties do they manage? Do they like their job and the agency they work for? Does the agency have the resources to successfully manage your property? There’s more to it than just cost.


Are you using a cheap agent that’s not meeting your expectations? Feel free to contact Jess at Savoy Real Estate on 0417 787 985, he’ll be sure to help you out.


* The above information is general in nature and may not apply to your situation. The above information is in accordance with the current legislation as at the 23rd of July, 2018.

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