A More Ethical Approach to Property Management
When considering revenue streams
and remuneration structures in property management, quality agents will ensure
that any put in place support an ethical business culture. An area where this
falters in the property management industry is the commission policies on
general repairs and maintenance. Some large and well-known agents set company targets
for achieving a level of commission income in this area. This creates the conditions
for unethical approaches which every agency should seek to rule out.
Take a typical contract which
endows the managing agent to undertake any repairs under the value of £300 at
their discretion. The managing agent has three different but reliable and
well-reviewed contractors on their books who can carry out the works:
·
Contractor
A will charge £200.00
·
Contractor
B will charge £250.00
·
Contractor
C will charge £275.00
It is clear to see that where
discretion is permitted the conditions of a commission target would bias the
agent towards instructing Contractor C. After all, their contractual
obligations are satisfied and another step is taken towards achieving their
target income. However this clearly isn’t in the best interests of the client
given that they are paying unnecessary costs of works which the agent can have
carried out more costs effectively. It is also clear from the above example
that although an agents fees may be clear in their contract, this will not shed
any light on their internal targets & remuneration structures and the type
of decision making they may influence.
Some agents may jump on the archaic view that this approach is perfectly
ethical given that it meets all contractual obligations whilst contributing to
the company’s bottom line. However ethics begins where the law (or contractual
obligations) end. In this scenario it should begin when the agent is
considering which instruction is in the best overall interests of the client
and, all other things being equal, it is not in the best interests of the client
that they incur unnecessary costs. An agent’s claim that it helped them meet
their commission target would not break any ice with the paying property owner.
It may be argued that such companies can put measures in place to offset the
risk such as checks to ensure the most cost effective option was taken. This is
not an efficient or effective means of achieving goals for any agency committed
to an integrated ethical culture throughout its business.
We at Spencer are committed to encouraging just such a culture and understand
that this means meeting maintenance costings with a healthy questioning
attitude, free of any general maintenance fees or commissions. This approach
works in the client’s best interest by providing practical and cost effective
courses of action with an unbiased view of which to take. This is in contrast
with the above approach aimed at achieving the highest level of commission in
the quickest possible time regardless of whether it really is in the best
interests of client.
At a time when agencies income streams are being squeezed it is likely
that the types of commission and remuneration mentioned above will be drawn on
as a way to bolster revenue. So, when seeking out a quality agent it is worth
looking beyond the fees outlined in their contract and asking questions about
the practices the company may have in place to achieve their targets. Their
answers may shed light on whether their approaches are actually consistent with
the interests of their clients and the true costs of their property management.
Speak to Spencer about our ethical stance on zero commission on any repairs on 0114 268 3682
rent@spencersestateagents.co.uk
www.spencersestateagents.co.uk
No comments:
Post a Comment