The latest Perceptions of Property Managers report examines the quality of service landlords and tenants receive from agents. It found that while the majority of landlords – 56 per cent – received good or excellent service from their property managers, 16 per cent of landlords experienced poor service and an additional 28 per cent received average service.
Tenants reported an even worse time of it, with 23 per cent stating their experience was poor and an additional 32 per cent claiming it was average – a total of 55 per cent experiencing substandard service. Only 35 per cent of tenants experience was good or excellent service.
There is a distinct hierarchy across the industry, where sellers are most likely to receive the best service (31 per cent), followed by landlords (16 per cent), then buyers and tenants equal on just 14 per cent receiving excellent service.
I hear you saying, ‘Agents get paid to service sellers and landlords. We’re just putting the effort where the money is.’ And that is true. But the degree of these experiences provides useful insights into where our vulnerabilities lie as an industry and how much money we are throwing away.
44% of landlords are questioning why they’re paying for services that are substandard in an industry that is being disrupted by startups.
According to CoreLogic, the value of residential property is $7.6 trillion, of which the ABS tell us 31 per cent – or 3.1 million properties – are rented.
Despite this, 44 per cent of landlords are questioning why they’re paying for services that are substandard in an industry that is being disrupted by startups.
Based on a median rent of $429 per week and a five per cent commission level, that’s a $3.5 billion commission pool annually for property managers. If we apply the degree of dissatisfaction of landlords to these numbers, we discover that $560m annually in rental commissions are actively looking to walk out the door, followed by an additional $980m from those who experienced average service and would be willing to consider an alternative.
When landlords were asked if they would use the agency who manages their property to sell it when the time came, only 28 per cent said yes, definitely. The research shows 39 per cent said they would definitely not use their managing agency, while 33 per cent were on the fence.
Tenants were even more scathing, with 31 per cent stating they would never sell through their agency and 62 per cent saying they would never recommend their agency.
Only 35% of tenants experienced good or excellent service.
WHY TENANTS ARE IMPORTANT
The tenancy perception is important when we look at the primary reason why a landlord will choose an agent. The survey shows that 34 per cent of landlords chose their agent because of their access to tenants. Take away that tenant access due to reputational issues, and the industry takes a hit.
Both landlords and tenants want property managers to be proactive, have good communication skills, be prompt
in their response times, be honest and trustworthy, and most of all reliable – and there is huge upside for the agencies that manage to crush it.
The research found that 38 per cent of landlords used the agency they bought their property through to manage it, with a further 38 per cent interviewing just one agent when making the decision to rent out their property. This shows that, for more than a third of the investor market, landlords are trusting those they are purchasing from and expecting an ongoing relationship. It’s time to deliver on that promise.