Imagine, if you will. You are about to sell the four-plex that’s been in the family for years. You always assumed you would use the broker who managed the property for over a decade, but you have been getting calls from an agent who “specializes” in real estate sales. Is it better to use the broker who has been managing your property or the agent who specializes in sales?
I’ll explain.
Should You Sell Using the Same Brokerage That Manages Your Property?
It depends on the brokerage. Real estate sales require different skills from management. However, offering the service of management should not disqualify a brokerage from handling sales. If your management company is skilled at brokerage, then they are very likely the best possible choice.
There may be benefits of listing your property for sale with a brokerage that only does sales, and there can be benefits of listing with a brokerage that already manages your property. Let’s see what applies to your unique situation.
The Benefits of Selling With a Brokerage That Only Sells Property
- Transactional expertise – There is a certain expertise specific to real estate sales that is not used in managing properties. There are general similarities, but there are also many specific contracts and disclosures that a property manager may not be familiar with.
- Market knowledge – The sales market is different than the rental market. This is very important when pricing a property and can also come into play during negotiations.
- Sales promotion – Listing agents' marketing and promotion focus on properties for sale, while many property managers will put more focus on properties for lease.
- Sales experience – You can’t get good at something without practice. An agent who only does sales would presumably have more experience in real estate sales.
The Benefits of Listing With the Same Firm That Manages Your Property
- Property knowledge – They will know the property better than an agent brought on just to sell. The management company will know the history better and be able to confidently answer buyer questions. They will be better able to speak to lease questions, repairs, HOA issues, or anything else that may pertain to the property.
- Tenant relations – If the management company is representing you in the sale, they will have an advantage working with the tenants. This is important for showings, inspections, and getting necessary forms filled out, like estoppel certificates. Having only one brokerage interfacing with the tenants reduces confusion and is less disruptive.
- Established relationship – You already have a relationship with the people who manage your property. It’s easy for an agent to make promises to get a new listing. Your property manager has been there to deliver bad news about repairs and problem tenants. You already know each other.
- Repairs and estimates – A lot is discovered during escrow. The property manager can usually obtain bids and arrange repairs better than someone who only does sales. This helps make fixes and negotiate credits during escrow.
- Incentive for success – Using your management company to sell the property provides a financial incentive to offset the substantial additional work required throughout the sales process. Typically, when the sale closes, the agent gets a large check, and the manager gets replaced. If the sale goes through the same brokerage, then the reward for success stays on the same team.
- Pre-sale preparation – Your property manager should be engaged in pre-sale preparation, including strategic capital improvements, small repairs, rent increases, and tenant relocation. Knowing the property will be listed through their firm will bring on extra enthusiasm and resources, as well as a reward for a job well done.
- Job clarity – Facilitating showings and inspections is the listing agent’s job and can turn into a lot of work over the entire time of the listing. Sales agents often try to push this task to the manager. Listing with a management company solves this problem.
- For sale and lease – You can easily put a property for sale and lease at the same time if you are using your management company to sell. This strategy is sometimes necessary if a vacant home does not sell quickly at a price that is acceptable to the seller.
- Management client network – Property management companies have an exclusive network of potential buyers and sellers. They have access to owner clients wanting to add properties, as well as some wanting to sell. Plus, they have access to tenants who can be good buyer candidates.
- Agent quality – You will often find quality agents working at and with property management companies. Property management companies are a reliable source of repeat business, which helps attract and retain quality agents. In-house leads and professional referrals are a lot better than buying Zillow leads or setting open houses.
What You May Not Know About Selling Through the Brokerage: Managing Your Property
- Same license - In California, real estate sales and property management both require the exact same Real Estate Brokers License issued by the California Department of Real Estate. Agents and managers are required to have a real estate license, and that license must be held under a real estate broker.
- Why some management companies don’t sell – Some management companies don’t list properties for sale because they get business from other real estate brokers. These companies don’t want the referring agents to see them as competitors. That’s why some management companies sell properties under a different name or refer the business out to another broker for a referral fee.
- Referral fees – When a management company refers out a seller or buyer, they typically receive a referral fee. These fees are common and legal, provided both parties have real estate licenses and the fees are paid through a real estate broker.
Is It a Conflict of Interest Having the Company That Manages Your Property Sell It?
You hear this sometimes from real estate agents who work for brokerages that do not manage property. They claim that management companies are less motivated to sell a property under management because they don’t want the management agreement to end. Let me assure you that sales commission takes the sting out of the end of a management agreement.
How Do You Decide if You Should List Through Your Property Management Company?
If the brokerage managing your property does sales, you need to determine if it is something they do once in a while or if it is something they are good at. They may have an entire department dedicated to sales with experienced agents.
If the brokerage managing your property is set up to do sales and they know what they are doing, they are very likely the best choice. If it is something they just dabble in, then you may be better off going a different direction.
If the management company does not do sales, you may still want to consider including them in the decision. Your manager will know who has a good reputation as a listing agent, and they will likely need to work together to get your property sold!
Bottom Line
When deciding if you should list your property for sale with the same brokerage that manages it or with a brokerage that only does sales, you need to consider several things. A brokerage that only does sales will have transactional expertise, market knowledge, sales-focused promotion, and sales expertise.
However, there are benefits to listing with the brokerage that manages your property, including: property knowledge, tenant relations, your established relationship, repairs and estimates, incentive for success, pre-sale preparation, job clarity, option for sale or lease, management client network, and quality agents.
Real estate sales and property management require the same license in California, but management companies that rely on broker referrals often hesitate to take listings because they don’t want referring agents to see them as competition. Those brokerages often have some kind of referral agreements with agents they work with to take the sting out of losing a management client.
If the brokerage managing your property is well qualified to sell property, then they are most likely the best choice. If it is not what they do, they may be the best place to start to look for a listing agent. After all, it will take a team to get your place sold!
For Real Estate Advice
We hope that you found this helpful and informative.
If you are looking for a real estate broker to guide you through the sales process or a reliable property management company to help you handle a rental property in Long Beach, Los Angeles, or Orange County, California, or if you are just considering it and have a few questions about real estate, contact the Mike Dunfee Group today! We are happy to help.
Dunfee Real Estate Services, Inc. DRE # 02026232
