How Heavily Should you Price Shop Property Management Services?
In the era of the internet, anyone can research almost every topic that exists in a matter of seconds. It’s allowed consumers to shop different products and services with the utmost efficiency. Most can learn every facet of the product or service they are seeking in a matter of hours, and make an informed buying decision. One of the side effects of being able to do vast comparisons between products and services so quickly is the ability to price shop so well. In fact, it’s now commonplace for large retailers to boldly advertise “price matching guaranteed” because they know competing with internet storefronts isn’t possible if they weren’t to do so.
This has created a culture of people obsessed with getting things for the best price possible; and who should blame them? When shopping products, finding it at the best price is almost an addicting game.
But what happens when we look at services?
The Pitfall of Price shopping Services
Products are black and white. Price shopping them is straight forward. If you’re looking for a new set of headphones, it’s simply a matter of looking around to see who will sell them to you for the least amount of money.
Unfortunately, services aren’t so black and white.
As consumers, we start factoring in matters that vary from person to person. Experiences, education, upbringing, and culture are a few factors that affect the things that we determine are important in our buying decision. Let’s use an analogy:
For example; Jack and Jill may both be shopping for a mobile car cleaning service to clean their vehicles while at work. For Jack, a service that includes cleaning the floor mats and doesn’t use harsh chemicals on his expensive wheels are his top things to look for while Jill looks for someone who simply won’t leave streaks on her windows, and she really doesn’t care about the service other than that. With Jack and Jill, they have their specific wants and needs as they call around different services. There’s simply more to it than just “what do you charge”.
If Jack had simply shopped his service by finding the cheapest mobile car detailer, he may be driving home with sticky floor mats and scratched wheels whilst Jill has to look through a streaky windshield. Jack and Jill represent a majority of consumers by factoring in levels of service while pricing comes second, but is still important.
There are also consumers who don’t care about nit picky details, and simply just “want their car washed for the cheapest” and expect a basic level of service. In other words, they know they’re paying for something, they should be getting a relatively clean car and will be just fine knowing they got it done for the least amount of money possible, or at least close to it.
However, this would be considered a risky purchase. This type of consumer may find the detailer took their car for a joy ride, didn’t bother to vacuum the trunk, and used the cheapest chemicals possible which were harmful to their paint. Now, a simple car wash has turned into expensive damage.
The majority of the time, shopping strictly on price can be a major downfall, and end up costing you more in the long run.
If someone is very inexpensive, they simply have to cut corners to run their business while letting level of service suffer.
Shopping Property Management Services
The example of the car detailing service is certainly less complicated than shopping property management, but it hopefully illustrates the themes that often lead to property owner’s demise.
For the last 4 decades, we’ve received calls and emails from landlords who are at their wits end; bringing us their situations that seem impossible to rectify at the hands of terrible, and sometimes downright negligent property managers.
Often, they will openly admit they went with the cheapest they could find and have found their investments dug into a deep hole of no rent payments, a destroyed property, and legal fees and battles to get rid of their management company and tenants.
Of course, our thought is, why not avoid it all in the first place?
A seasoned landlord understands the value of getting what you pay for in that going with a property management company they can trust to oversee their property property may cost more than the guy offering to do it cheaper, but in the long run, they’re mitigating turnover time, maintenance costs, assuring timely rent payments, etc. In other words, they know if they pay a few bucks more a month, they are avoiding potential massive expensive problems by going with the cheaper guy.
As a few examples of disaster scenarios we see with cheap companies, check out our article Landlord Horror Stories
There’s a fine line of getting ripped off and paying a company their worth so they can provide the best level of service. Read that sentence again!
It goes both ways. Before one goes and picks the most expensive service they can find, it’s important to find out why they’re the most expensive, and to see if it’s worth your while.
How to Decide What’s Best for You
First and foremost, find a management company that you feel confident can handle your property correctly making sure they do all the things we advocate a professional firm should so. Then, once that list is compiled, price shopping is much more warranted.
Avoid calling around and asking “what do you charge”. You should be asking “what is your level of service” and then ask the other question. This simple distinction alone will save your investment’s future.
For help with your Southwest Florida rental properties, all of us here at Douglas are ready to show you how our cost vs service ratio is the best in our area by providing simply the highest level of service at affordable pricing.