Dear Realtor: Let us Manage Properties
May 25, 2018
Realtor or Property Manager?
Because both of these professions deal with real estate, and there is some overlap in functions and responsibilities, there can be confusion for clients—and even for those involved in the real estate industry. For instance, Austin Fleck Property Management in Gilbert, AZ is strictly focused on management of rental properties. Yet in order to do this, we’re required by the State of Arizona to have an active Real Estate License. Can we act as a Realtor? Yes. Does Susan Austin-Fleck as the Broker list or sell property? No.
There are many similarities on the surface. Both professions will determine accurate pricing and screen potential clients’ financial situations; both will need to resolve repair and maintenance issues before closing a deal; both will make sure insurance needs are met; both will schedule showings; both keep up with changing laws; and they handle many more tasks common to their respective industries.
So What’s the Difference?
The biggest difference is in the nature of the business. The realtor’s responsibility ends with the closing of a property, because it is a transactional business. The property management company has continuing responsibilities for the duration of the rental cycle, because it is a contractual business. For the property manager, the work is ongoing. For the realtor, part of building a successful business is knowing when to refer your clients to a management company.
How does this play out in real life situations? There are differences in pricing variables: the real estate market is more volatile, while the rental market is fairly stable year-on-year. The realtor will work with banks and mortgage companies on background and financial checks; the rental property manager runs the background checks directly. For the realtor, the repair and maintenance issues are the seller’s responsibility, whereas the property manager will need to deal with those things on an on-call basis. The realtor will receive his or her commission in full at closing, but the property manager receives a small percentage of each month’s rent for his or her expertise and services.
A Friendly Message To Realtors
If you’re a Realtor with an active Real Estate License, you could be tempted to dabble in property management, especially during a slump in the real estate market. For example, it might seem to make good economic sense to wait on selling a house until the housing market rebounds so that the client can get a better selling price. Meanwhile, that client’s house could be rented out allowing the client to receive income on the property. And then at a later date, when the market’s rebounded, the house can be sold for a better asking price.
But, there are many behind-the-scenes aspects to property management, and if you’re not experienced in handling the nitty-gritty details, you, your broker, and your client could be exposed to liability—and the client relationship(s) you’ve worked so hard to establish could be ruined. Do yourself a favor; place the property in the hands of a dedicated professional rental management company. Your clients came to you for buying and selling, and they’ll continue to do so. Why risk losing their business by working in a business arena that is unfamiliar to you or not your area of expertise? Handing over the property management responsibilities to seasoned professionals frees your time, energy, and resources to focus on your real estate transaction business. And since a property management company is trained and experienced in their field, your client will thank you for it. When Realtors and Property Managers work together by doing what they do best, everyone does better financially, and it becomes a win-win situation.
Austin Fleck Property Management has worked successfully with many realtors in various contractual situations where we take care of the management of rental properties. We’re here to help you grow your realty business and make money for you and your client. Contact us, and let’s see what we can do together.