Agents preferred tradies - do some agents get kickbacks?

I have never worked in an agency where anyone received kick backs for any maintenance.

I also am very aware there’s a number of trades that won’t deal with agents because they have been ripped off or mistreated in the past (especially with payment). I have 30 day payment terms because most tenants here pay monthly, but if I know something is coming up I withhold funds and also pay out funds to trades daily. That keeps my existing trades happy, but it can be hard to find new tradespeople if they’ve been burnt in the past.

 

Obviously before you can commit to a subby, there must be a) funds in the LL/tenant's account (or reasonable expectation that there will be) or b) Owner's consent to proceed with the works.

 

Of course, if it’s going to be overdue for some unforeseen reason then I will get funds transferred from the owner. This normally only happens where there’s been a vacancy, or if it’s a large invoice (anything large is transferred by the owner first before works proceed or is withheld from their account until invoiced).

 

No it is not.
If you sign a contract where in the small print is written.
The agent in his duty may receive a benefit of up to 15% of the contract price for assisting in the delegation of work. Then it circumvents the law according to the NSW Government.
I own a large agency and turnover is $60 million in repairs per annum. We do not receive a commission from tradesmen. Many of the tradesmen approach me and say why don’t you do what the other companies do and seek a rebate against our charges.
Whilst it is against the law if it is not in the contract;
No one can find out,
No one in the government cares if you report it to them,
Clients when you show them that the previous agent skimmed $1,000s from them in repairs etc say “ everyone does it”
If your quote is higher because you do not receive a % from repairers, the majority will vote for the lowest agent fee.
If it is in the contract then it is unethical but not illegal.

 

It's very uncommon for agents to be receiving secret kickbacks from Tradespeople, OR in some cases they own the Trade company... but it exists.

I wouldn't stress about looking for it unless something doesn't seem right in your particular situation.

As an earlier poster mentioned, the cost of our quotes being uncompetitive usually comes down to laziness. It takes a LOT of effort to constantly balance keeping great trades on the books, but also not letting them get complacent (i.e start to overcharge). Most PM's don't even know what a competitive quote looks like either... which doesn't help.

 

We have never received a kickback on trades. I've never been interested in rebates or secret commissions because it's not in the best interest of our clients and it will always seem a bit conflicted to me.

On the topic of trades not working for agents, most of the ones I have dealt with prefer agents. They love that work orders with access instructions just come through on the email and as long as they can wait upto 30 days (or sometimes rarely 60) for payment, they love the business-to-business dealing with quick little jobs without the fuss of dealing directly with the public.

As for pricing, WOW! - I wish I get our regular guys to come out of town where we live. The relationships we build with our regulars come down to reliability, professionalism and price. Reliable = do what you say you will do, make contact in a timely manner, etc | Professionalism = be courteous to tenants, phone if you will be late, clean up after | Price = priced low enough that we won't need three quotes.

A good PM will always use good and low-priced trades. And low-price doesn't mean low quality - it comes from the high amount of easy jobs that real estate agents provide.

 

Some agencies own trade businesses as well, have partners/family/friends that have trades businesses and there are other businesses like insurers etc that provide kickbacks to property management agencies. Now in saying this, agents can often choose if those kick backs make it to their tenants. For example I give referrals to a depreciation schedule business and the kick back they give other agents we have asked that is reduced from the clients price. I know there are other agents who dont and then I would assume that the kick back goes to something else - lets say the end of year xmas party or shopping spree.
The real question is is your agent acting in line with their fiduciary duty when they refer someone to you or they engage someone on your behalf. The good agents will make sure prices, quaility and communication is always on point and if you have a good maintenance plan in place so that they contact you and provide you options on how to move forward then this should make it easier. Best advise I can give as a PM and as an investor if you start to have the feeling your wanting 3 quotes on everything then it prob means you need to look at getting a new property manager because you dont trust that they are working in your best interest.

 

I've heard that a few times now,
Not sure how payment to a tradie can be a problem unless the agency doesnt pay, which there shouldnt be a problem unless the work was shoddy

 

Look, I agree. I always ensure my trades are paid on time, 30 day payment terms (because rent is paid monthly in most cases) but if I know the rent is coming in between when the job is sent and when it would likely be invoices, I will withhold funds.

I have a trade that I’ve used for a long time and his partner is a PM, he only does work for our agency now because he got sick of poor work orders coming through from others, without clear instructions, slow payments etc. My brother in law is also a sparky who had said the same thing (I don’t use him). I also have another trade that transferred their property to me because of similar reasons.

I will also cover the invoice if I’ve stuffed up. Just recently I had a job completed where I put incorrect information in the work order without realising, trade had to go back and my stuff up cost me $730. Wasn’t my trades, owners or tenants fault and someone has to pay it - no point arguing about it. I do know a lot of agencies where they will refuse to pay leaving only the trade out of pocket even if it was an agency error.

 

In NSW it is handled within the Property Stock and Business Agent Act. There is a Section 47 which has a prescribed disclosure form.

 

The general consensus amongst the pms here is that if they make a mistake they will cover the mistakes (as all businesss should in my view)

However leaving the tradie out of pocket like that is terrible, and if this happens across the board, its no wonder im cynical about pms in general

 

A previous company I worked for as a PM we’re putting their fee on their invoices. They would organise the trade then invoice under their logo with the extra fee on top. It’s completely unreasonable and just plain wrong. I told them they had to stop immediately as I was having not part in it.

I have trades I use that have followed me from
Job to job, I trust them and they trust me. It’s hard finding good trades. If you feel as though the prices don’t seem right do your own checking or organise another quote.

 

No, it's an FM fee.

I have worked for several of the big 5 managers, each use teams of facilities managers and charge for the services provided usually as a retainer plus works.

 

Resi LL's don't see it that way though. Big difference when your cashflow is $1M/mth on an asset vs $2k. The FM retainer pales into insignificance.