On Real Estate Agents, Missed Opportunities and Other Stuff

Ahhhh, Real Estate Agents (aka realtors in the US) – you either love ’em, or hate ’em.

Over many years, the development of the industry has seen the big focus on the “sexy” part of the business – listing and selling wonderful homes and making the big bucks.  Good pub talk and lots of profile.


When we look at the property management side of the industry though, it is seen (and yes, I know I will be howled down for this) as the poor cousin.  It’s not as sexy, the revenues aren’t as good, the advertising collateral is pretty crap and all you do is deal with nit picking tenants and unreasonable landlords.

Why is it this way?  Why does it have to be this way?

When we’ve looked at a real estate agency to buy or sell, the vast majority of the value in the business resides in the rent roll.  When you look at a notionally well run real estate office, the rent roll income pays all the operating expenses for the business for the month so that sales commissions are “cream”.

Considering this, why doesn’t the property management department get more “love”?  It would appear to be the place where people get inducted into the industry, or get “promoted sideways” until they leave.  Sure, there are some exceptional property managers out there, but the general perception is that it’s a bit “dead end”.

Now, my question is, what would happen if property management “got its mojo back”?  Imagine how a really good property management division would look – established and well communicated expectations for tenants and landlords, commitments to and actual delivery of service that was valued and appreciated by all the customers.

Think of the true value that the owners of the business would realise if their property management division was firing along?  This, remember, is the core component of the value in any real estate office and is also a very liquid investment for the business that can quite easily be sold off.  The cashflow it generates is (when run well) very healthy and it can provide an underpinning for the whole office.

So, if you own an real estate business, how “well” do you look after your property management arm?  My bet is that you could probably do a lot better at it and, once you do this, your income and underlying wealth will improve substantially.

Taking this thinking a step further, we also see that many businesses do not direct attention at the “boring” aspects of their operations.  Is it because they’re boring?  Probably.  Remember that (according to some) 140% of your profit comes from 20% of your business.  My observation is that the less sexy bits of a business really underpin the whole business and yet they don’t get the “lurve” they deserve.

Have a think about your business – are you paying attention to the boring stuff that pays the way?  Or are you missing an opportunity by not realising you’re sitting on a “field of diamonds”?

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