What’s Really Driving Fee Pressure?

Lisa Pentland Headshot sandstone

An article by Lisa Pentland

Is fee pressure really a result of your competition or could it be that …

Until recently, most often it has been our Property Managers who have been tasked with the responsibility of handling inquiry and negotiating the fees and terms of their company’s Management Agency Agreements. In my experience most (not all) Property Managers openly admit that they are not comfortable in a sales role and don’t enjoy it at all.

This makes perfect sense as the competencies required of a great Property Manager are more akin to those of an accountant i.e. attention to detail and problem solving skills. A Salesperson however, is enamoured with the communication skills to influence a preferred outcome.

Our surveys of successful career Property Managers using personality profile surveys such as the DISC model, identify the majority of effective career Property Managers as a “C” (conscientious) and an “S” (steadiness). Property Management Leaders tend to be C or S hybrid with “D” (dominance). High performance Salespeople and Selling Principals will often fall into the “D” and “I” (influential) categories. To see more on DISC profiles click here or for a very quick insight search DISC images.

Very few business owners invest in formally training their Property Managers in the sales skills they need to assist them in building the value of their services. Techniques to optimise their opportunities employing skilled follow-up methods, developing and managing a new business pipeline, asking open ended questions, building rapport and value, handling objections, negotiating and closing a sale, to name a few, generally don’t come naturally for people with the skills required to be a great Property Manager. So firstly we are tasking the wrong people with the job - never a recipe for success.

Further, I have found very few offices investing in CRM practices or software to support Property Management Business Development and no – our Trust Accounting products do not support business development – they have a different function.

And then we have incentives. Still the frustration of many businesses struggling to find the secret formula that will excite Property Managers enough to find an additional 3 hours in their day for prospecting, appraising and follow-up activities because who wouldn’t want to put another 10 properties into their already bursting portfolios? Here’s the tip – there is no incentive that will overcome these issues.

It’s an all too common theme that many of our Property Managers are already time strapped and struggling to stay on top of their primary workload in managing their portfolio. And even those with some extra capacity will invariably find something more important to do (like stick pins in their eyes) because prospecting, appraising and listing is not their preferred activity.

“But it’s their job!” I hear you thinking. Perhaps that’s part of the reason our industry suffers such a high churn rate – placing unreasonable or unrealistic expectations on people with little or no support is effectively setting them and our industry up for failure – who wouldn’t opt out?

How many top sales people would stay in a role where they had to manage every property that they sold to an investor? What effect would this eventually have on their sales volume? Do you think that they would work as hard to sell a property to an investor as they would to a home buyer? Would they eventually leave and go to a competitor where they didn’t need to manage property and could focus on doing what they love and are best at?

So as an industry we offer to the market untrained, distracted, stressed and possibly even disinterested people, tasked with the unwanted burden of selling the company’s property management services. Could it be that perhaps it’s not your competitors dropping their fees that’s driving downward pressure on your returns but the fact that our customers are better negotiators with a greater interest in the outcome?