Fraud or no?

[Shannon Reynolds]

My property in MD is turning over to a new tenant. My PM sent me a quote that gave me a small heart attack. Upon further inspection, I quickly recognized that the times they were allocating for various tasks were grossly overexaggerated. For instance, changing the battery in a garage remote and reprogramming it. That shouldn't take a professional longer than a couple minutes. They had 2 hours! When I confronted them, they defended their quote, stating that they go off the industry standard and a portion of the labor time is for "testing the system after repairs to ensure safety." To which my response was, "so 5 min to complete, 1 hour and 55 min to make sure the new battery doesn't explode in the remote and burn down the entire neighborhood?"

That was just one example of what I would consider to be fraud by grossly misrepresenting the time required to complete even the simplest tasks...like changing a couple light bulbs...30 min! 😂

Can someone shed some light on this matter? Isn't that some form of Consumer Fraud?

If so, I assume I am obligated to mitigate through my contract, but I declined to allow them to do the work anyway. For me, it's the principal of the matter. They admitted to charging the same for other turnovers, so if it is fraud, it seems like grounds for a Class Action lawsuit? If PMs in MD operate like they do in CO, they are required to keep all client records for 4 years. And the Real Estate Commission would have to investigate any written complaint. If they confirm the complaint, they would turn it over to an administrative judge for ruling. Then the Commission would act according to the ruling...but they can't assign punitive damages. So, who does...I've gone this far down the rabbit hole. I want to see the Queen! Lol. 

[James Wise]

Quote from @Steve Vaughan:

I've been on both sides: self-managed 3 dozen for 19 years, then had a PM for half my last 2 years.  

If they did it right, without upsetting your tenant, it's a win.  Stroke the $90 or whatever check and move on.  Or self-manage. 

What got me to tap out and exit was the lack of willingness to do repairs/replacements a new way.  I was being billed to repair and find replacement covers for 1970s style 4ft flourescent lights in kitchens.  Ballast repair ($150) and a tech driving from store to store to replace covers.  WTF?  Here's a stack of $25 LED fixtures genius.  Swap em out at turnovers already. 

That type of thing and a $500 quote to replace a leaking irrigation valve that took me 4 minutes to fix forced me to throw my hands up and sell by owner.  That and the incredibly low cap rate in '22. 

I liked the way they could swap an appliance at my cost, but most things you're paying for convenience and anonymity.

 Crazy thing is, you'd be surprised how many BP investors cry when we do intelligent things like replacing the 1970's fixture instead of driving around to an endless amount of stores to find the parts needed to fix it. This is especially common when it comes to 100 year old windows.

[Mark S.]

@Shannon Reynolds Why did you bother to post your question? You asked, received answers and now you are arguing about the answers. If you didn’t want the opinion of others, don’t bother posting.

[Shannon Reynolds]

David,

Maybe you got lost in the thread or stopped after a certain point. Don't worry, you wouldn't be the only one...it's a lot to follow. Especially when so many people hopping on here want to give the exact same emotionally-charged, offended, and "personal" opinion over and over...and over. It's comedic and ironic that you made the comment that I'm the one taking it personal. From where I'm sitting, reading some of these replies, you would think I insulted these peoples' moms and kicked their dogs...or vice versa.  🤣

I'm sure the same comments will keep flowing in regardless, but if you read through the thread, you'll see that I abandoned my specific issue and just wanted to know, "what exactly is the law, though?" "At what point is the line crossed?" You can scroll up. I found my answer. Case closed. 

Thanks for your enlightening reply tho. Sorry for triggering you. Hope you have a wonderful day.

[Shannon Reynolds]

Mark,

When did I argue with anyone? They offered an opinion. I said, "Hey, thanks. That's a helpful opinion, but I've moved on to a new question now. Can you help me find the specific laws about this topic so I can do my due diligence?" And now I'm a heretic? How dare I post on her to increase my knowledge? I should just give up on the pursuit of self-improvement and fall in line, so I don't hurt peoples' feelings and make their childhood trauma of feeling discredited and unheard flare up.

"Sorry, Mark! Sorry everyone who felt insulted by me asking more than one question. I hope you all live a long, happy life with all the people who love you and you don't spend undue time worrying about this silly BP thread anymore."

[Sebastian Bennett]

You sound like a nightmare client for anyone who performs services for you.

[James Wise]

Quote from @Sebastian Bennett:

You sound like a nightmare client for anyone who performs services for you.

 Hardest thing to train real estate service providers on is when to turn down a client. It ain't like selling t-shirts, not everyone is a good client. Have to know when to say no to someone.

[Sebastian Bennett]

@James Wise These are the property owners who also drive up our insurance filing claims over nonsense! 

[James Wise]

Quote from @Sebastian Bennett:

@James Wise These are the property owners who also drive up our insurance filing claims over nonsense! 

 It never gets talked about here on BP, but it's fairly easy for a difficult client with like 1 house to be unprofitable for a property manager.

[Clayton Silva]

@Shannon Reynolds not sure why the responses are so negative and snarky. While it's definitely not fraud as many have mentioned. I can totally empathize with your sentiment. I'm not endorsed by nor do I work for Turbotenant, but I had the same realization as you and I started self managing everything even from across the country. Have never looked back. I would at least find a new PM or have a serious conversation with them and the owner. Over charging on repairs can be the difference between profit and loss for a lot of smaller landlords.

[Shannon Reynolds]

Quote from @Sebastian Bennett:

You sound like a nightmare client for anyone who performs services for you.

Why? I said I'd happily pay a premium rate if I understood the logic. I said to my PM, "Wait, that sounds sketchy, can you explain?" Their response was, "That's just how it is, we're not going to explain it to you." So I came here. And all these lovely people are like, "Yeah, that's how it is. You're just a bad person." 🤣 Luckily, some people, like Magic James, actually took the time to explain "why it is the way it is." Even tho it was all angry and James still thinks I'm a "bad person." Now I know. And now, I can just focus on what's important...reading all the hilarious troll posts that keep coming in. Thanks for your post Sebastian! 🥰

[Jay Hinrichs]

Quote from @James Wise:

Quote from @Sebastian Bennett:

You sound like a nightmare client for anyone who performs services for you.

 Hardest thing to train real estate service providers on is when to turn down a client. It ain't like selling t-shirts, not everyone is a good client. Have to know when to say no to someone.

my Dad who taught me how to sell real estate and work with the buying public always told me Son your an independent contractor you choose who you work with not the other way around and the most important word is NEXT.  I love that about our business if we are not ginning with a client we just fire them with no repercussions just like Jim fired me long ago and before I could get out there and get some deep fried Ruben balls..

[James Wise]

Quote from @Jay Hinrichs:

Quote from @James Wise:

Quote from @Sebastian Bennett:

You sound like a nightmare client for anyone who performs services for you.

 Hardest thing to train real estate service providers on is when to turn down a client. It ain't like selling t-shirts, not everyone is a good client. Have to know when to say no to someone.

my Dad who taught me how to sell real estate and work with the buying public always told me Son your an independent contractor you choose who you work with not the other way around and the most important word is NEXT.  I love that about our business if we are not ginning with a client we just fire them with no repercussions just like Jim fired me long ago and before I could get out there and get some deep fried Ruben balls..

[Drew Sygit]

Here's some more "fun" to share with everyone.

Had an insurance claim a few years ago. 

Helped owner maximize the claim with their insurance company. Interestingly, insurance companies have flat amounts for just about everything, based upon zip codes.

Once owner got their funds, they proceeded to nickel & dime us for every and any bid item we gave them. All our prices were UNDER what the insurance company paid, and they still weren't low enough.

So, owner went and hired someone to do the work cheaper than us. 

3 months later they called us to take over and the job was a mess. Their cheap guy took their money and did only half the work, which was shoddy at best.

[James Wise]

Quote from @Drew Sygit:

Here's some more "fun" to share with everyone.

Had an insurance claim a few years ago. 

Helped owner maximize the claim with their insurance company. Interestingly, insurance companies have flat amounts for just about everything, based upon zip codes.

Once owner got their funds, they proceeded to nickel & dime us for every and any bid item we gave them. All our prices were UNDER what the insurance company paid, and they still weren't low enough.

So, owner went and hired someone to do the work cheaper than us. 

3 months later they called us to take over and the job was a mess. Their cheap guy took their money and did only half the work, which was shoddy at best.

 Ya'll remember the "Cash Flow King" Matt Motil? He used to be a regular contributer on the BP forums. He operated out here in Cleveland before he got exposed for running a Ponzi scheme. He used to tell people HoltonWise charged too much for repairs.

We took over a property Matt "renovated" for one of his customers. Check out this kitchen he did lol.

[James Wise]

Quote from @Shannon Reynolds:

Quote from @Sebastian Bennett:

You sound like a nightmare client for anyone who performs services for you.

Why? I said I'd happily pay a premium rate if I understood the logic. I said to my PM, "Wait, that sounds sketchy, can you explain?" Their response was, "That's just how it is, we're not going to explain it to you." So I came here. And all these lovely people are like, "Yeah, that's how it is. You're just a bad person." 🤣 Luckily, some people, like Magic James, actually took the time to explain "why it is the way it is." Even tho it was all angry and James still thinks I'm a "bad person." Now I know. And now, I can just focus on what's important...reading all the hilarious troll posts that keep coming in. Thanks for your post Sebastian! 🥰

 Bad person? No idea. Bad client? Yes.

[David Niles]

Quote from @James Wise:

Quote from @Drew Sygit:

Here's some more "fun" to share with everyone.

Had an insurance claim a few years ago. 

Helped owner maximize the claim with their insurance company. Interestingly, insurance companies have flat amounts for just about everything, based upon zip codes.

Once owner got their funds, they proceeded to nickel & dime us for every and any bid item we gave them. All our prices were UNDER what the insurance company paid, and they still weren't low enough.

So, owner went and hired someone to do the work cheaper than us. 

3 months later they called us to take over and the job was a mess. Their cheap guy took their money and did only half the work, which was shoddy at best.

 Ya'll remember the "Cash Flow King" Matt Motil? He used to be a regular contributer on the BP forums. He operated out here in Cleveland before he got exposed for running a Ponzi scheme. He used to tell people HoltonWise charged too much for repairs.

We took over a property Matt "renovated" for one of his customers. Check out this kitchen he did lol.

 Who doesnt run their pex on the outside of walls and cabinets....lol

[Shannon Reynolds]

Quote from @Clayton Silva:

@Shannon Reynolds not sure why the responses are so negative and snarky. 

I'm over here trying to be "positive" and snarky, Clayton. Haha. There's a lot of toxic animosity floating around this thread and I'm trying to be the voice of reason. Like, "Hey everyone, I get it. Clearly, there're a lot of unresolved feelings inside some of us that got bottled up and we just want to let them all out, put them all on this Shannon-guy, and find other people who can validate our big emotions. But, maybe, I mean, I'm no therapist, but maybe this isn't the place. Let's just put this to bed and do more productive stuff. No need to take out all your pent up frustration on your keyboard."

On another note, @Clayton. Your suggestion did not go unnoticed! Sincerely, thank you for that recommendation. I will check out Turbotenant and I do intend on having more conversations with my PM. 

[Matt Devincenzo]

Quote from @Shannon Reynolds:

...If I know absolutely nothing about cars and I take my car into a mechanic for an air filter change, if they tell me it will take 10 days to fix and bill me $1,000 for labor...that is fraud? Correct? They are taking advantage of me because I told them I know nothing about cars and they chose crime. This is a valid example of an industry that was eventually exposed as being vulnerable to fraud, and once it was exposed, people were like..."Ah, yeah. That's fraud! Lawyer up." 

 I think the issue is (in part) the 'sequence' of events for 'fraud' to typically occur. If you are provided a front end quote with an estimate of labor hours, even if the estimated hours are inflated then you have the opportunity to accept or reject the cost. That is not fraud.

If by contrast you have a proposal where the mechanic says, I'm not sure how long this will take so can you authorize me to just bill the hours spent? and then he bills 10 hours after spending one hour on it, then that is more likely fraud. Or if they say 'we replaced your XXX' and bill you for it but didn't actually replace anything then that is fraud. 

Why is the first scenario ok, and the second not? Because when you have the initial estimate and go over the cost you can decide if the value derived is acceptable based on what is charged. Not knowing you can go down the street and get the same service for 1/10th the price is irrelevant. You were ok with the charge when you agreed to it. 

In your case, you were NOT ok with the cost and declined the service...that exact sequence is what proves that no fraud was committed. You were provided a clear opportunity to accept or reject the quote and chose to reject. 

[James Hamling]

@Shannon Reynolds I am glad you brought up automotive repair as that's a great example. DETAILS matter. 

On an auto quote one will notice it does NOT say "hours", it speaks to BOOK hours, they are 2 different things. 

Since a mechanic is an expert at repairing autos and not playing Nostradamus and predicting exact future, they use an industry accepted, published, estimation table to predict the appropriate billable time for said repair, known as book hours. 

So no, it's not fraud to say you bill by book hours, a person accepts that quote, and things go better than they could and took a bit shorter. 

In home repair and maintenance, it is the same, tech's are not psychics. 

So, often ones will quote from estimation tables which are industry accepted and standard. Which often the time is a total combined project time encapsulating more than the specific task alone, but things such as roll-out, roll-up, any ancillary tasks, maybe getting materials, site travel etc etc... 

And nobody in their right mind would ever charge in 5min increments, that's just ridiculous. 

Now, pulling back the curtain a bit, if you act up front as have acted here a service provider will sense that and, intelligently add-on additional "WTF" charges because it's anticipated your going to burn up tons of there time in additional "WTF" items such as demanding to know how many minutes xyz took. 

You can always elect to choose a per fee vendor, who simply charges a set known fee regardless of time. I am assuming you avoid that thinking you will come out ahead micro-managing for minutes. 

If approach vendors from a 1-sided mindset of looking to squeeze as much out of them for the absolute minimum $ possible, that is called a parasitic relationship, and your only going to get parasites of vendors working with you in any duration. 

If you interacted with persons in trying to understand there quoting as you communicated here, no you wouldn't get much for answers because it's demanding, condescending and with hollow threats, nobody wants to deal with that BS or person so of course they blow you off, I bet you'd blow that person off too. 

I suggest next time approaching it in a inquisitive respectful manner vs how it sounds you did.

[Corby Goade]

People are always so excited about what their PM charges or doesn't charge. If it's not working for you, fire them and find a new PM. 

Sure- those charges are ridiculous, so find someone else. No biggie. Why invite all kinds of new stress in to your life by drawing things out with them?

[Michael P.]

I would say yes, class action lawsuit is warranted here. Source: I got crabs in Maryland. 🦀 

[Joe S.]

Quote from @Shannon Reynolds:

Quote from @Clayton Silva:

@Shannon Reynolds not sure why the responses are so negative and snarky. 

I'm over here trying to be "positive" and snarky, Clayton. Haha. There's a lot of toxic animosity floating around this thread and I'm trying to be the voice of reason. Like, "Hey everyone, I get it. Clearly, there're a lot of unresolved feelings inside some of us that got bottled up and we just want to let them all out, put them all on this Shannon-guy, and find other people who can validate our big emotions. But, maybe, I mean, I'm no therapist, but maybe this isn't the place. Let's just put this to bed and do more productive stuff. No need to take out all your pent up frustration on your keyboard."

On another note, @Clayton. Your suggestion did not go unnoticed! Sincerely, thank you for that recommendation. I will check out Turbotenant and I do intend on having more conversations with my PM. 

I’ve had some good experiences and bad experience with PMs. With that being said, I made the choice to no longer self manage any longer when it comes to rentals.  
Best regards to your real estate journey.

[Rob Hakes]

If somebody is giving you a quote for more than it may be worth, they probably just don't want to do the job.  Sometimes if it seems the customer is going to be more of a pain that we want to deal with, we can add significant amounts to the quote.  Then it is up them to decide.

Just saying

[Stetson Oates]

Quote from @Rob Hakes:

If somebody is giving you a quote for more than it may be worth, they probably just don't want to do the job.  Sometimes if it seems the customer is going to be more of a pain that we want to deal with, we can add significant amounts to the quote.  Then it is up them to decide.

Just saying

Looking at some of the comments and reviewing your situation, I would move on from this management firm.  If the bid is outrageous, pickup your toys and go play elsewhere. As Rob stated above, they may want you to find someone else. I wouldn't put so much work into convincing them their bid is too high, put that energy into finding a better management firm.  

[Don Konipol]

The reason people DON’T get wealthy in real estate is that instead of going with a different service provider when they’re unhappy with a quote and concentrating on earning more money through additional and better investments - they spend the time and energy researching if they can sue, who they can sue, what agency they can report the vendor to, if a class action is possible and the very technical legal aspect of flat fee quote vs hourly quote.