Satisfaction Guarantee: Should You Fear Property Management Contracts?
Satisfaction Guarantee: Should You Fear Property Management Contracts?
Part 3 of 8-Part Series on Service Guarantees
By Brian Bean
Dream Big Property Management
When you hire a property manager, you sign a written agreement that details their responsibilities and the length of the contract. But what if your property manager had to earn your business every single month? Would the quality of service they provide change at all? I bet it would.
Today we’re talking about unkept promises and whether you should fear signing a contract with a property management company.
The Legal Reality of Property Management Contracts
Have you ever signed a listing agreement with a real estate sales broker or a property management company? In California, like most states, to hire either, there must BY LAW be a written agreement that details the parties involved, the property, everyone’s responsibilities, and of course, the timeframe. That last one is what scares people.
The Fear Factor: Questions That Keep Property Owners Awake
- What if they don’t do a good job?
- What if they don’t do what they promised?
- What if I just change my mind?
- Can I get out of the contract? Will it cost me any money? Or will I be forced to work with them till the end?
Yeah, all those questions… the fear takes hold and drives you to some unlikely, but dark, places.
I’ve had those fears myself, anytime I’m presented with the request to “Sign Here.” Usually it’s my cell phone company or an internet provider turning those screws.
The Industry Problem: Trapped Clients and Unhappy Relationships
I talk to at least one rental property owner per month who is under contract with a property manager but frustrated and unhappy and looking at their options. The short answer in those situations is usually, “If you have an agreement in place with another property manager, we’re not able to work with you.” In our world, it’s an ethical breach to steal an active client from another company.
And in property management, the agreements are almost always at least one year. Some have exit clauses but they include large cancellation fees. Large enough to make it painful and ward off requests.
The Fundamental Question
But it makes you wonder, why would anyone WANT to work with someone who was unhappy with the arrangement? Why would they FORCE them to stay? I can’t think of anything more unpleasant in business.
Our Solution: The Easy Exit Agreement
That’s why, 20 years ago, we implemented an Easy Exit Agreement that essentially allows clients to fire us at any time, for any reason, without penalty. Today, we call it the Satisfaction Guarantee.
At the time, our friends in the business said we were crazy. “No penalties? Everyone will leave and your business will die.”
What Actually Happened
Reality #1: No one left. Everyone stayed… not because we said so. It was enough to know that they COULD leave, if they chose to.
Reality #2: BECAUSE they could leave, WE had to double down. The risk had been transferred from the contract to our performance.
We had to be GOOD, but constantly get better, to improve our SERVICE, and to KEEP our promises. We turned up the communications, we added and perfected systems, but MOSTLY, we ran our business and made our decisions based on our core values to put our clients’ financial well-being ahead of our own.
If they COULD leave, we wanted to make sure they NEVER entertained the thought.
Why This Matters in Property Management
Property management is such a mission-critical business. On one end, we oversee what in many cases are the largest assets our clients own. On the other end, we provide homes for people that are safe, comfortable and legally compliant. It’s a huge responsibility, and it’s over-the-top difficult because it’s often emotionally supercharged.
The Industry Challenge
And yet, the bar to entry is not that high. It’s surprisingly easy to start a property management company, which is why the industry has a bit of a black eye – low barriers breed low performance. It’s also why 64 percent of single-family rental homes are managed by their owners, according to a recent Property Management Trends report conducted by The Harris Poll.
Fear Is Keeping Property Owners in the Wilderness
Which brings us back to the F word – Fear. Rental owners are afraid to sign a long-term contract with a property manager. Heck, 2 out of 3 rental owners are afraid altogether to hire a property manager. But the truth is, they should be more fearful of being in the wilderness on their own without a guide. And if our Satisfaction Guarantee is enough to take away that fear, then that is a happy byproduct of the policy.
But if you’re not happy, should you be handcuffed for the duration?
Our opinion is No, you should not. If we’re not living up to our clients’ expectations, and we can’t or won’t fix the problem, that’s on us. And we’ll release anyone to go hire another PM.
The Reality of 20 Years: Honest Results
And guess what, in the last 20 years, we’ve had more than a few clients leave. Several hired other PM companies after us. In some cases, we were sad to see them go and disappointed in ourselves for not meeting their expectations.
Others, the decision to part ways was mutual. Full disclosure, we’ve also fired a few clients on our own. Some people just aren’t a good fit for each other. It could be a personality issue, it might be differences in expectations, or even differences in business philosophy. At the end of the day, it doesn’t matter why. What matters is that it’s always better to part friends than to make enemies.
Core Values That Drive Our Approach
Our core values define how we do business, and two of them specifically apply here:
1. Own the Outcome: Perform well and take responsibility for your actions.
2. Put the Client First: Be advocates for our clients and put their financial interests ahead of your own.
The Business Philosophy That Changes Everything
When you treat your clients like partners, when you have a spirit of service that is focused on what’s best for them, people will want to work with you. They won’t be afraid to sign your agreement because they know you won’t hold them hostage.
But if you want them to stay, you’ll have to earn it every month.
The Bottom Line
The Satisfaction Guarantee isn’t just a policy – it’s a business philosophy that puts service quality over contract security. When companies can’t rely on penalties to keep clients, they have to rely on performance. And that makes everyone better.
For property owners afraid of being trapped with poor service, our guarantee removes that fear. For us, it creates the pressure to constantly improve and earn our clients’ business every single day.
After 20 years, we’ve learned that great service retains clients, not contracts. And clients who stay because they want to be there, not because they have to be there, create much stronger business relationships.
Have questions about our Satisfaction Guarantee or any of our other service guarantees? Call Brian Bean directly at 951-314-5402. I’m happy to share.
About the Author: Brian Bean is President of Dream Big Property Management, serving rental property investors throughout the Inland Empire of Southern California. With decades of experience helping “accidental landlords” become “intentional investors,” Brian specializes in service guarantees that put client interests first.
Series Navigation:
8-Part Service Guarantee Series:
- Part 1: Why Service Guarantees Matter
- Part 2: Communication Guarantee
- Part 3: Satisfaction Guarantee (you are here)
- Part 4: Performance Guarantee (coming next)
- Part 5: No-Hidden-Fees Guarantee
- Part 6: No-Upfront-Charges Guarantee
- Part 7: Lease Guarantee
- Part 8: No-Eviction Guarantee