3 simple ways to increase your management fees
Stop talking in percentages, change your mindset and invest more in finding great tenants, is one expert's advice for letting agents looking to increase their management fees.
“In the current climate, and with the Tenant Fee Ban now in effect, agents have got to be doing whatever they can do to get more managed properties and to charge higher fees, not lower fees,” says lettings and estate agent trainer Boyd Mayover. The Sales Doctors’ founder has several tips for letting agents who are looking to increase their management fees.
Stop talking in percentages
First of all, he advises letting agents to start talking about the cost of their management fees in real terms, rather than percentages, which can make fees come across as higher than they really are. “We’re one of the few industries that expects its customers to know in their heads what that percentage means and what it’s going to cost,” says Mayover.
“Think about a property with an average rent of about £2,000 a month. Two percent of that is only £40 pounds a month, which in the greater scheme of things is not a lot of money to a landlord,” says Mayover. “Conversely, if the landlord was also looking at an agency who charges 2% less, I would say to them ‘Well, hang on a second, we're talking £40 pounds.”
Change your mindset
He says agents shouldn’t worry about being perceived as more expensive than their competition and think about their service instead as being worth more. “You are not more expensive than your competition. Your competition are cheaper than you. If it was just about money, then Waitrose and Marks & Spencers would go bankrupt,” he says.
“The landlords you want are going to care about the service you provide and you need to build the value, explain the impact of the Tenant Fees Ban and the changes to Section 21, and why it’s more important that a property’s fully managed now,” he says. “If the landlord truly believed that the cheaper agency was offering a better deal, you probably don’t want them as a landlord - they’re probably not interested in service or value.”
Invest more time in finding great tenants
Boyd also emphasises the importance of finding great tenants quickly as part of your proposition to landlords. Although it might sound counterintuitive, Mayover also recommends spending more time talking to potential tenants on the phone, to improve pre-qualification.
“You might go on fewer viewing but your conversion rates will be better, your applicants will feel they got better service and you'll have more referrals. You'll show less property to get the same amount of offers,” he says. “Landlords care about you finding them the best tenant in the timeframe that suits them.”