Disagreement with property manager

[Carleton C.]

Last year, I hired a property manager as I was getting married, finishing grad school, and starting a new job (had self managed before that). Things went okay for the most part, besides some accounting errors on their end. My biggest disappointment came when it was time to begin looking for new tenants for the upcoming year.

I was getting $1,800 per month from the current tenants, but several properties similar to mine were popping up on the market with prices between $2,500 - $2,700. I talked with my PM and told them I would like to increase the price for the next year. They suggested $1,900, but told me it was ultimately my decision.

A few days later I hear back from them and they said they spoke with the owner of the PM company and due to their proven strategy which includes market assessment, they were only willing to market my property beginning at $2,200 and dropping the price every few weeks it stayed on the market. I was caught off guard because I figured they would be interested in trying to make more money (they get 9% of rent) and I thought it was my decision. I understand that it’s not in either of our best interest to be unreasonable (ex. asking for $5k per month), but since we were 5 months away from the current tenancy ending I figured why not give the higher listing price a shot, especially when there were multiple other units near my property doing so. They would not budge on the price, so we agreed amicably to let them continue the PM services until the current tenants left and then we would part ways.

I begin marketing the property a few weeks later after that conversation and had a new lease within a few days at $2,600 per month. Has this been anybody else’s experience? This was my first experience with a property manager, so I’m not sure if that’s normal. I may need a PM again in the future and I want to be able to trust their judgement and experience if I do, but had I listened to them I would have been out of at least $400 per month, not including PM fees.

[Theresa Harris]

I'm glad you stuck to your decision.  Think of a PM like a realtor, they want to get it rented (or sold).  The difference for them between you renting it for $1000 vs $1100 is $9 (if you are paying them 9%), difference to you is $91.  Now if it is vacant, they get $0 instead of $90 at the lower price.