with Darren Hunter Presented by realestate.com.au
Who is Darren Hunter? • Based in Adelaide SA • Started in Property Management in 1989 (Adelaide) • 15 years frontline experience as a Property Manager, Property Inspector, Senior Property Manager • State Property Manager for 18 offices over SA, NT, VIC, NSW • 12 years as a Trainer and Consultant • Maximised PM fees extensively over Australia, New Zealand and the US
Agenda: How your mindset dictates how much you can achieve in fees. The power of the ‘BIG BUT’ that stops you getting better fees. What type of owners you cannot increase your fees with. Why your clients will pay more and stay. What fees you can add or increase. Some scripts to overcome fee discount requests. How to get better internet marketing & leasing fees with new clients. Audience Q&A
Question for the Audience Who’s in the room today? Where are you from? • QLD/NT • NSW/ACT • WA • VIC • SA • TAS
You CAN! • Safely increase your fees with your new and current clients without damaging your rent roll and sending your fee income backwards. • Increase and add some fees with well established and even ‘tight’ owners. • Up to double your profit margin without having to double your doors, double your staff and overheads, to get the same result. RIGHT NOW there’s likely a bigger problem we need to deal with…
The first step, believe it’s possible
Get your BIG BUT out of the way FIRST • “But what’s the management fee for?” • “But we’re already too expensive.” • “But we’ve got too many discounters down the road.” • “But my owners will just leave for a cheaper agent.” • “But no - one has ever charged that fee before.” • “But my Property Manager will not let fees be increased!” To succeed you need believe it’s possible.
One Sydney agency said they were already ‘too expensive’ went onto achieve an extra $14,000 extra per year month.
Perth Principal didn ’ t believe better fees was possible … until he bought another rent roll with nearly double his own fees!
What OWNERS want most of all…
Question for the Audience When was the last time you had a fee increase conversation with your owners? • Last month? • 6 months ago? • 12 months ago? • 2 years ago? • Never?
Owners to NEVER increase fees with • Owners you’ve had for less than 12 months or are still on a fixed term management agreement. • Owners purchased in the last 12 months. • Owners that have reason to be unhappy with your service at present. • Owners who’s property is pending vacant or is vacant.
Why your clients will stay and pay • It is easier to pay a bit more than move their business. • They would rather stay with who they know, than move to someone they don’t . • What annoys them now soon becomes their NEW ‘normal’ . • Nearly ALL clients just accept the change. • As long as they have no other reason to be upset with your service, they will pay your increase in nearly all cases.
What fees you can add or increase? Keep your Management and Leasing fees at market rates unless you have strong points of difference. You CAN add a couple and increase a couple ancillary fees. • Lease Renewal fees. • Internet Marketing fees. • Ingoing/Outgoing fees. • Routine inspection fees. • Monthly Admin fees. • Annual Statement fees. • Property Set-up fees.
What fees you can add or increase? Repairs and Maintenance fees. Tribunal/Court attendance fees. Insurance Claim fees. ‘Outside of Normal Duties’ fees. Renovation fees. Rent Increase fees. Special Payment fees. Payment Disbursement fees.
The notification letter / email • Keep it brief. • Get the header subject right. • Use a justification paragraph. • Have a clear effective date. • List your fee changes - be transparent and clear. • Refer to agreement to be returned. • Invite queries/questions. • The person with best relationship to have name on letter. • Always send with a new management agreement.
What happens when you increase your fees with current clients? • You should receive no more than 10% in phone calls/emails. • Of the 10% of response, 3% will be ‘concerning’ . • When challenged on your fee increase respond with … “ Mr Smith, we’ve had to increase our fees because of the ever increasing cost of business, plus we haven’t revised our fee structure for 5 years. You’re an important client to us. What do you is fair to both of us?”
What happens when you increase your fees with current clients? If it’s a ‘C -Class Owner’ then consider: “ Mr Smith, we’ve had to increase our fees because of the ever increasing cost of business, plus we haven’t revised our fee structure for 5 years. We need to charge our new fees. Please let us know what you want to do” .
Losses – reasons why • They didn ’ t want their fees increased and would not negotiate. • The owner has a ‘friend’ with another agency. • They perceive you to be too far out of the area. • They wanted less fees than they were being charged before. • Usually the loss is a low fee/low rent owner who takes up a lot of your time (C-Class owners). • More bad business in means more bad business out.
How much financial loss is typical? • Property loss can be 2-3% for a quality ‘selective business’ agency . • Property loss up to 7% loss for a low quality ‘all business’ agency. • As 66% to 80% of property loss is low fee/low rent property this fee loss is quickly overcome by the financial gain. WE HAVE NEVER SEEN the fee income loss exceed the fee income gains of such a campaign
When it comes to new business… • Have 2-3 strong points of difference, particularly surrounding their three core needs: best rent, best tenant and in the quickest possible time. • Have great property marketing with professional photos, video, 3D tours. • Don ’ t be boring - be the obvious choice! • Know you ’ re worth it and your clients will believe you too. • Understand you will always be challenged to discount, so it’s in the way you respond that counts! • Get strong in scripts and dialogue - this brings confidence and enthusiasm.
When they say ‘Can you match your fee with the other agent down the road’ or ‘the other agent will do it cheaper’ "Mr Smith, we are aware of the fees other agents are charging, but they know what our fees are too! Despite being aware of this, knowing that they cannot compete with us on service to win your business, they have instead adjusted and discounted their fees in line with their service levels .”
When they say ‘Can you match your fee with the other agent down the road’ or ‘the other agent will do it cheaper’ “ Mr Smith, if you’d like us to match the other agent’s fees, we will also need to match their service levels. Typically we hear of our competitors not returning calls for days, not attending to urgent repairs and not returning emails at all. If you want us to match their fees, we will need to match their services too! As we are unable to compromise on our level of service, we cannot compromise on the fees we charge for our services either. I’m sure you understand.”
If they say ‘ The other agent charges a cheaper leasing/ internet marketing or charges nothing’ “Mr Smith, thank you and we are aware of what other agents are charging. When it comes to the leasing/marketing of your rental property, if other agents are charging less or nothing, this really does reflect on the value they’re placing on the ability to lease/market your property and get you the best rent, with the best tenant in the shortest amount of time. Their level of fees reflects the importance they ’ re placing on it. Go with the wrong agent here and you could save some money on leasing/internet marketing fees, but it could cost you a whole lot more with a vacant property for every week it sits vacant. It cost potentially cost you up to $X. ”
If they say ‘The other agent has a cheaper leasing fee’ Understand it’s all about getting the best rent, best tenant in the shortest possible time. • Use an online booking system. • Use the national database checks. • Show them your tenant screen process. • Show them your 100 point check. • Tell them horror stories of ‘cheaper agents’ . • Ensure you have better marketing.
If they say ‘The other agent doesn’t charge that much for internet marketing or charges nothing’ Other tips to get a better internet marketing fee. • Load professional photos. • Use an online booking system. • Load a floor plan (ask the sales team). • Do a walk-through video with a voice-over tour. • Consider a Matterport Camera – 3D tour • What looks more professional is perceived to be better for OWNERS and TENANTS.
Question for the Audience Should the Management Fee and Leasing Fee be the two main fees charged, and not much else added on? A) YES - most services should be included in the Management and Leasing Fee. B) NO - additional services should be added as well on top of the management and leasing fees because we are worth it!
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