Dealing with Conflicts

It is all part and parcel of the job, but property managers are surrounded by conflict and it’s their responsibility to make sure everybody gets along.

Of course, that’s easier said than done. Passion runs high when money or the roof over someone’s head is at stake.

So it is important for property managers to deal with these situations as they arise, and, more importantly, to prevent them from occurring at all.

Real estate trainer Nathan Brett from Real Estate Dynamics (RED) believes people become defensive when it comes to money.

“Anything money-driven is fairly sensitive. This could relate to rent arrears, maintenance and any bond or vacate
inspections. These are the big areas for disputes,” he says.

Residential Tenancy Authority (RTA) CEO Fergus Smith’s findings align with Mr Brett’s claims.

According to Mr Smith, the RTA’s dispute resolution service helps resolve disagreements between tenants and
agents in Queensland, reducing the need for applications to the state tribunal.

“The RTA received 22,077 dispute resolution requests in 2011 to 2012,” he says. “A dispute can occur at any time during a tenancy. Bond money is often the cause of the dispute, accounting for 47.3 per cent of all disputes received by the RTA in 2011 to 2012.

“Bond disputes occur at the end of a tenancy and for a variety of reasons, including disagreements about outstanding rent payments, the state of the premises, or costs involving water usage. “Disputes involving claims for compensation in excess of the rental bond, or claims after the bond has been distributed, account for 18.4 per cent of total disputes,” he continues.

“Disputes during ongoing tenancies account for 34.3 per cent of the total, a significant proportion. These disputes are most often related to repairs and maintenance, rental arrears and ending a tenancy early.”

Dealing with a tenant

“Things go along pretty smoothly with tenants, until they vacate,” claims director of Mitchell Property Management, Hayley Mitchell. She is a well-known industry speaker, who often presents at national industry conferences, has trained other property managers and is a founding member of the Real Estate Institute of Victoria’s (REIV) Property Management Interest Group.

“Most of our disputes are around bond refunds,” she says. “The tenant says ‘it was like that when we got here’ and we sit there with our paperwork and say, ‘no, it wasn’t’.

“Documentation and being prepared from the start is key. Our condition reports are extremely detailed and we take a lot of photos, so that at the end of a tenancy we can look back and say ‘this is how we gave it to you, and this is how you’re giving it back to us’. Hopefully we can negotiate things through from there, without going to tribunal.”

Mr Brett agrees the work done at the beginning of a tenancy can pay off at the end, saving all parties time and money.

“The best way to avoid conflict with a tenant is to get in early and start educating them about what will happen throughout the course of the vacating process, and what they should do to maximise their chances of getting their bond back in full,” he says.

Dealing with a landlord

Education shouldn’t just stop with tenants.

Landlords also need to be educated and reminded that it is their obligation to provide maintenance on a property.

“It’s a continual education process,” Mr Brett says.

“So you have to remind them that they need to maintain their asset to maximise the returns it can generate.

You also need to remember to make a number of positive calls to the landlord through the course of the tenancy, so that when you call them you’re not always bringing bad news.

“It’s often the case landlords only get a call from property managers asking them to ‘spend spend spend’, which gives a negative vibe to your relationship.”

Ms Mitchell believes she has educated her landlords to the point where she hardly has any complaints or issues from them.

“Most of ours are pretty well trained. It comes down to using the right tradies and getting the right advice.

If I’m not sure of something I will meet the tradesperson at the property and have them run me through it,” she says.

“Then I will call the owner and say ‘here is what the situation is, this is what I believe is the appropriate course
of action’. So you’re actually an expert – you know what’s going on instead of being a messenger between the owner and the tradesperson.”

Time to say goodbye

In a tough market it can be hard to turn down a listing, but according to Mr Brett, it could cost you even more in the long run.

“Property managers and principals should sit down and rate their rent rolls,” he says. “They need to look at the quality of the asset as well as the property owner, and work out a formula to rank them as A, B, C and D rated properties.

“In our opinion, the D class – a combination of a poor asset and a tricky owner – isn’t worth the risk.

It’s true that 20 per cent of your clients will take up 80 per cent of your time.

“The cost of taking on a risky property instead of turning it down could potentially be massive.”

Ms Mitchell agrees there is a point where it isn’t worth the hassle.

“If the property is not up to standards, and we’re not going to be able to get a quality tenant for it, we won’t take it,” she says. “If I feel the landlord isn’t willing to do maintenance or won’t do any improvements to attract the right tenants, it’s not worth the time.

“If there are any issues that arise at the appraisal, such as a new coat of paint or a new carpet and they refuse, you’ll be hard pressed to get any maintenance out of them down the road.”

Remember who you work for

According to Mr Brett, the customer isn’t always right but even if they are, the property manager works for the owner.

“A part of their role is to educate both the owner and the tenants.

“This is where we sometimes find communication breaks down, as the property manager needs to educate the
owner about the tenant’s rights and responsibilities, without seeming to work for the tenant,” he says.

“Property managers who find they have to talk to the landlord a lot about their responsibilities, need to remind
them frequently they [the property manager] work for them, not the other way around.

“In these tricky situations, email may not be your best friend.

“Even though it’s easier, quicker and gives you something to hide behind, it’s not the option to choose,” Mr Brett says.

“Face-to-face is your best option.

However, if that’s not possible, picking up the phone allows you to communicate a little better and faster. After that, you follow up with an email.”

CASE STUDY

The best way to keep all parties happy in a conflict situation is to mediate, negotiate and compromise, as director of Mitchell Property Management, Hayley Mitchell, discovered not long ago

“The owners of a property had lived in their home for 27 years, but were going overseas for 12 months and
decided to rent out their property during that time,” she says.

“After they left, the new tenant informed us the heater had stopped working properly. It still worked, but
it could only heat half the house. It couldn’t be fixed and it would cost $2,500 to replace the unit, which the
owner obviously didn’t want to pay.

“We managed to chat to the tenants and agreed to buy a couple of electric heaters so they could put them around the house to heat the areas which were left in the cold In the end it only cost the owners $300 instead of $2,500, and the tenants were happy with the outcome as well. So even though by law they
were obligated to replace it, we negotiated an outcome where both the tenant and landlord were happy.”