Why cheapest is not always best

Price is a very important factor when choosing a managing agent to look after your block of flats but it should not be the only one. You would expect a managing agent to say that, however, here are some reasons why we think you should think very carefully before picking the managing agent purely on price.

They may not have invested in joining professional bodies. These are a business cost to them; however they are a very important part of keeping up knowledge about this fast-moving sector and maintaining professional standards. Check if your prospective managing agent is a member of ARMA (Association or Residential Managing Agents) ALEP (Association of Leasehold Enfranchisement Practitioners). Plus the individual who will be looking after with your property is a member or an associate of IRPM (Institute of Residential Property Management). The most unscrupulous managing agents may put logos and membership claims on letters and their membership may have expired. Check with the association directly to eliminate any doubt. These associations also will give you an additional channel for complaint should the worst happen.

Administration and paper trails often suffer in firms with under-investment or larger firms who don’t have responsible manpower to know what they are dealing with. It takes man hours to check invoices, check on works and keep in touch with clients. If you are happy regularly chasing your managing agent, accepting that paperwork may not be done and supporting them with the admin work then a cheaper agent may be right for you. If you are an unpaid volunteer on the management committee then you may quickly resent all the work you are doing that a higher quality managing agent would take on board as part of their contract.

Watch out for hidden costs. A good managing agent will not only clearly show the extra costs you are likely to pay, but will bring your attention to them. They know you will have to pay certain disbursements and additional fees and they know that you won’t like it when they are a surprise. So they will want to alert you to them during the tendering process. These extra costs can really add up and some apparently cheaper managing agents with lower monthly fees have burdensome fees on such things as VAT, recovery on unpaid service charges, mark-ups for sending letters or cheque payment surcharges.

Check they are fully insured. Insurance is expensive and you want to make sure they can pay if something goes wrong. Ask to see a copy of their professional indemnity insurance and check that the level of cover is adequate. If in doubt, check with your own insurance broker.

Make sure they are really going to do the work they promise. There are a few unscrupulous managing agents that give the majority a bad name. Ensure you get testimonials, speak to existing clients and ensure the company has been around for some time.

Be clear about what commissions and incentives are being paid to the managing agent. Some get paid by sub-contractors and this can subsidise the fee they charge you. However, it means they are not independent and you may not be getting the best service for your block.

Check also if the proposed managing agent is registered with the FCA preferably or are a nominated agent with one broker to deal with any insurance matters especially at renewal, so that they are able to negotiate the best terms for you and able to administer any claims properly. These are important factors which are often forgotten

The research you conduct before appointing a managing agent will save you considerable money and time. Your fellow residents will soon let you know if the standards are not to their liking once the managing agent has been in place for a few months, even if they insist on paying the least possible during the tender process. It will be too late then to remind them they all voted to go for the cheapest managing agent.

At the end of the day the best Managing Agents are good administrators, who are able to advise and oversee the proper maintenance of your homes and property.

© 2012 Colin Cohen Property Management, All Rights Reserved.