Property Management Fees?

Question

I've just started using a property management company. They have some questionable clauses in their agreement with me and I'm requesting an amendment but the owner doesn't seem happy with my request and I want to know if this is normal when working with property management companies in the Sonoma County region. Here's what's in the contract:

*To contract for repairs or alterations at a cost to Owner not to exceed $350.

*To execute service contracts for utilities and services for the operation, maintenance, and safety of the property as Broker deems reasonably necessary. The terms of any such contract will not exceed 12 months and the amount payable each month will not exceed $250 without the prior approval of Owner.

I want to change each dollar amount to 0. Is that asking too much from a property management company? I understand it will mean more admin work on their end communicating with me.

Drew Sygit · Answer

Yep!

Good luck finding a PMC that will accept being micromanaged.

Actually, $350 Owner Approval Threshold is at the lower end of the scale. Many are $500+.

How well do you even understand WHY property management companies have these clauses?

Bill B. · Answer

Mines is $250 and it’s “strange” how many repairs come out to $250, so I’m glad it’s not $350.  Here’s the big deal as I see it for having that limit in place.

The tenant contacts pm, pm contacts vendor, vendor goes out finds $250 problem, contacts pm, pm says ok and problem is fixed.

Now I,agile vendor goes out, finds z$200 problem contacts pm and pm says ok well ask owner, go about your day.  After you finally approve it anyway, as you obviously will want to avoid the vendors $100-150 charge for going out there. (I assume you don’t want to be called for an approval to send someone out everytime?) then they have to send the vendor back out again. Maybe he charges that $100-$150 seperate trip charge, maybe vendor or tenant is busy now, or tenant already took one day off work. Etc etc.  Get it fixed while they are out there.

If you don’t trust the PM, switch NOW. If you do, it’s a blessing not a curse. In 25+ years, appliances are about the only category that my PM’s vendors get price checked, and that’s because I’m willing to look for a deal and free delivery/removal to save $400-500 because I’m that kind bored. Plus then I can waste that money on something else.  You’re never going to price check  $200 repair, it costs too much time/energy and sometimes actual money.

Be grateful you have so few problems that this is a problem. Let me tell you. You’ll forget about it when the next call is a pair of $7,000 ac units, or a $12,000 roof. You got started, you’re doing fine, enjoy your free time because you hired them.

Chris Seveney · Answer

Just remember, if you put it down to zero, you go away for a weekend, and a $25 part breaks. They don't have authorization to fix it, and it causes $5,000 worth of damage. That's an expensive fix.  Also, utilities will be put in your name, so you will now be responsible for paying the gas bill, the electric bill, all the utility bills, and all the transfer of service when a tenant moves in and moves out. Is that what you really want?

David Peschio · Answer

I completely agree with the consensus here. Those figures are low, and when you transition to a management company, the goal is for them to handle the day-to-day operations and only involve you when matters become complicated or unclear.Most management companies provide portals that grant you full visibility, allowing you to monitor maintenance requests and progress as they occur.

Adam Bartomeo · Answer

$350 is VERY low and in all honesty a waste of your time and their time. You should go back to self managing and the amount of control you would like to have is unrealistic.

Joanie York · Answer

I just wanted to say thank you to everyone whose taken the time to reply! It's been incredibly helpful and given me a much better understanding of the PM landscape.

Melanie Thomas · Answer

Yes, asking to change both thresholds to $0 is probably going to be a non starter with most professionally run PMCs. Those clauses exist for a reason. Most management companies are not going to operate efficiently if they have to stop and chase owner approval for every light repair, service call, or utility issue.

The thresholds are there to keep the wheel spinning, protect the asset, and most importantly keep tenants happy. Delays in repairs usually turn into frustrated tenants, poor reviews, and eventually non renewals.

That said, if you are very hands on, you could try negotiating for a lower threshold that makes both parties comfortable instead of zero. But completely removing the PMC’s ability to act is going to create bottlenecks fast. Good luck & happy investing!

Terrance Hill · Answer

Hey Joanie, good question. Those clauses are pretty standard in most property management agreements. They’re usually there so the manager can handle routine repairs or urgent issues without having to wait for owner approval every time. Asking to drop both limits to $0 is pretty uncommon, and most PM companies will push back because it slows down maintenance and decision-making on their end

Jim Johnson · Answer

Personally, I think setting those limits to $0 would probably be too restrictive for most PM relationships. The clauses themselves sound fairly standard — the idea is usually to allow the manager to handle routine operational issues without needing approval for every small item.

I’d probably look for a middle ground instead:• Lowering the repair threshold• Requiring approval for non-emergency work above a certain amount• Clarifying what qualifies as an “emergency”• Requiring estimates/photos before larger repairs

For me, the bigger issue is less about the exact dollar amount and more about transparency and communication. If you trust the process, the thresholds matter a lot less.

Richard F. · Answer

The OP's "limits" are absurdly low. We always recommended an amount equal to one month rent, or near to it. These days you usually can't get a water heater or toilet changed out for less than $1000, at least not by a duly licensed and properly insured vendor.

OP failed not closely reviewing the management agreement BEFORE signing, and asking appropriate questions about each critical system and process, and seeking "typical" cost ranges for common tasks. Your LICENSED PM has a fiduciary responsibility to you, however they also are required by law and, if members, the NAR Code of Ethics, to follow ALL applicable laws. Certainly, there are some shady PM's out there, but it is up to you to perform due diligence to select one you can trust. Just like Doctors and Auto Mechanics, there are good ones and bad ones. By the way, if you came to me asking essentially to re-negotiate after the fact, I would hand you back your keys.

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