We provide expert property management in Newcastle and Lake Macquarie. Based in Charlestown NSW, we have been delighting property investors with our personal, professional service since 2011. If you find this article helpful or enjoyable, please subscribe or share it with someone else who may benefit.
At some time or another, many investors will receive a letter from their real estate agency advising that they are selling their property management interests to another business. That is, that the rent roll (the rental properties they manage) and perhaps other assets including the business itself will be sold to another business who will carry on the relationship with you from there.
If you've had a great relationship with your existing agency (we hope you've been so lucky!), this news can be quite concerning. In this post, we discuss what happens when a real estate agency sells their property management business and what to consider before signing a new managing agency agreement with any agency.
Is A Real Estate Property Management Rent Roll Sale Unusual?
The fact that the real estate agency or property management rent roll is being sold is not in itself a problem. This is a natural part of the real estate business cycle and happens with frequency all around the country. The sale of the property management business could be due to the agency downsizing, selling off a small portion of its portfolio, or quite often due to the owner of the business reaching retirement.
What can be concerning is what the sale actually means for you, the investor.
What Happens When My Real Estate Agency Sells Their Business?
As an investor with a rental property under management with a real estate agency that is selling, you will very likely first be given a letter from the existing agency with a brief overview of the reason for them selling, along with a new Managing Agency Agreement to sign to engage the services of the new agency they have sold to.
The Managing Agency Agreement is the document you would have signed with your existing real estate agency, agreeing to the terms of the arrangement, summary of services to be completed on your behalf, fees, notice period to terminate the agreement, etc.
Typically, the new agreement you are provided will be offered with no adjustment to the fee structure you have been used to with your existing agency.
However as frequent readers of our articles would know, there's a lot more to a quality property management business than fees!
What To Consider Before Signing An Agreement With The New Agency
1. You are under no obligation to transfer your business to the purchasing agency
You are under no obligation to accept to move management of your rental property to the purchasing business, just because your existing real estate agency is selling to them.
2. Remember, you had no say in who the purchasing business is
Your existing real estate agency has been through detailed negotiations to arrive at a decision to sell to the successful purchasing agency. You however, have not been consulted in this process.
For this reason, you should not simply accept to move your rental property over to the purchasing business without completing your own research first.
3. Would you have chosen the new agency to manage your property if the decision was up to you?
Consider this whole process an invitation to look at your options afresh. Is the purchasing real estate agency the business you would have chosen to manage your rental property, if your existing agency wasn't an option?
Who else would you consider, and how do they stack up? Remember to look at the likes of Google reviews specifically for their property management services, as there's no value in seeing how great a business is at selling houses if you're not selling a house!
4. Staff moving to the new business may suffer and/or not stay
When selling their real estate business, some agencies will arrange for their existing property management staff to transfer to the purchasing agency. While this can be a positive sign that there could be some continuity of the level of service your previously received, this is no guarantee. Issues regularly arise such as:
What Should You Do If Your Real Estate Agency Is Selling to Another Agency?
In summary, consider all your options. You are looking for stability long-term, from a committed, happy and experienced team.
We recommend reading this article for tips on identifying a quality property management business if you are exploring your options.
And if we can help you in the next step of your investment journey, we'd love to answer any questions you have.
We provide expert property management in Newcastle and Lake Macquarie. Based in Charlestown NSW, we have been delighting property investors with our personal, professional service since 2011. If you found this article helpful or enjoyable, please subscribe or share it with someone else who may benefit.
Carnelian Property Management Newcastle NSW
We are a family-owned and run Charlestown real estate agent offering expert property management across Newcastle and Lake Macquarie.