See Part One for the first 4 pitfalls that come with charging cheap fees.
5- Problems with Resourcing
I read an article recently stating that our Y-Gen staff and our upcoming Z Gen (18 and under) are all tech-savvy and are used to modern technology like iPhones, iPads and Apple Mac Computers.
This is no secret, but if these tech-savvy workers come into a working environment that has ancient computers and old software, the article suggested that this could be enough in some cases to drive them out of a business and into one that is keeping up with technology.
Having cheap fees means that you cannot resource well as you simply cannot afford to keep up. This is a point really worth considering!
6- Overloading Property Managers
It makes sense that to try and maintain a profit margin with a cheap fee base simply means you need to have property managers managing by sheer volume.
Other than this affecting service levels that just creates landlord dissatisfaction, it also creates burnout with staff resulting in a greater turnover of staff and resignations, adding a lot more expense and churn.
I cannot see how this is helpful for any business!
7- Creates Greater Business Owner Dis-interest
Naturally when a real estate principal compares their earning potential between sales and their rental department, in most cases the sales usually wins as the ‘cash cow’, and therefore gets more focus.
Even worse is when the rental department seemingly does not earn anything more than just enough to pay property management staff salaries and expenses.
The principal may simply dismiss their department as a ‘necessary evil’, a bi-product to the sales process and a babysitting service to provide the sales leads. If a rental department is reduced to this level, the results can only mean dissatisfied staff and upset landlords.
8- Inability to Ride out Tough Times
At the time of writing this article, the housing sales market appears to be struggling in most cities and areas across Australia. We would all agree that when sales are tough and hard to come by, the survivability of the company really depends on a strong property management fee income.
I know that when I hear of a real estate office closing my question is, ‘did they have no rental department or a cheap fee department?’ because a good rental department has the potential to allow a sales department to ride through tough times.
Did you relate to anything in the above list?
If perhaps you could relate to one or more points in our list, there is something that you can do about it.
Up until now, you relied upon the fact that you could win new business, using discounting and cheap fees as your point of difference. This gave you confidence and your ‘edge’ to win the business.
All you need to do is to come up with a new point of difference that still impresses new owners, but will not impair your ability to earn a profit and remain financially healthy. But be willing to throw this discounting and cheap fees ‘ace up your sleeve’ into the bin!
So I challenge you to adjust your mindset and move to a new level of profitability today!
All the best!