Industry Intel

Pros and cons of hiring third party management agents with discounted fees

Kevin Redman

Executive Consultant | Operational Living

Nov 07, 2023

When hiring a third party management agent, there are various factors for the building owner to consider. One such consideration is the fee structure offered by third party management agents.

To win business, some third party management agents may choose to discount their fees. However, like any decision, there are both advantages and disadvantages to such practices for Building Owners.

The Pros

Cost savings

The primary advantage of third party management agents discounting fees is the potential for cost savings. A reduced fee structure can lower a landlord's overhead expenses, allowing them to allocate those savings elsewhere. This can be particularly beneficial for property owners with multiple rental units or limited financial resources.

Building long-term partnerships

Discounted fees offered by managers help secure contracts in the belief that it will establish long term partnerships between the management agent and the building owner. By providing competitive pricing, management agents would hope to demonstrate their value and commitment to maintaining a mutually beneficial relationship.

Higher tenant satisfaction

Discounted fees can lead to higher tenant satisfaction, enhancing overall experience. Additionally, with more budget flexibility, resources can be allocated more effectively, benefiting the supply chain and overall operations.

I’ve observed reputable third party management agents being commissioned on discounted fees and in such cases, the building owner has received added benefits for the residents, leading to higher tenant satisfaction and longer lease agreements.

The Cons

Quality of service concerns

While lower fees can be attractive, Building Owners must be cautious not to compromise on the quality of service in pursuit of cost savings. Discounted fees may compound into shortcuts taken or reduced resources allocated by the third party management agent, potentially resulting in inadequate maintenance, delayed responses to tenant issues, or insufficient marketing efforts to fill voids.

Limited-service offerings

Third party management agents that discount their fees may do so by offering a scaled-back service package. This can mean omitting certain services such as emergency availability, or comprehensive property inspections. The absence of these services may lead Building Owners to take on additional responsibilities or seek alternative solutions, which could increase their workload and potential stress.


Some third party management agents may discount their fees to quickly generate business or compete with other providers. In such cases, there is a possibility that they do not have the bandwidth or time to deliver exceptional service. Building Owners must thoroughly research and assess the reputation, reviews, and the track record of the discounted service provider to ensure they are going to receive the same high level of commitment.

Perception of service value

Building Owners should consider how the perception of discounted fees might impact their overall reputation and the perceived value of their rental properties.

The decision to hire a third party property agent that offers discounted fees requires careful consideration of the potential pros and cons. While cost savings and access to reliable services can be advantageous, Building Owners must assess the impact on the quality of service, the range of offerings, and their own reputation as property owners.

Thoroughly researching potential service providers, examining their reputation and offerings, and evaluating their commitment to customer satisfaction are crucial steps to ensuring a successful partnership and ultimately, the long term wellbeing of their investment and residents.

If you're interested in discussing this topic further, please reach out to Kevin Redman:

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Executive Consultant | Operational Living

Kevin Redman

Beginning his recruitment journey in 2005, Kevin now boasts over 18 years’ specialist experience. Kevin went on to found his own recruitment company in 2012, and quickly established a well-respected name in the Real Estate Operations sector. Now Kevin heads Oyster’s Real Estates and Operations division, ambitious to elevate Oyster’s exposure in the sector.

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