Satisfaction Guarantee: Should You Fear Property Management Contracts?
Part 3 of 8-Part Series on Service Guarantees
You Can Fire Us at Any Time, for Any Reason, Without a Penalty
By BRIAN BEAN
Rental Home Advocate | Property Manager | Real Estate Broker
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.
CA DRE #01346382.
Series Navigation: The Eight-Part Service Guarantee Series
- Part 1: Why Service Guarantees Matter — Service Guarantees That Reduce Rental Property Investment Risk
- Part 2: Communication Guarantee — Communication Guarantee: Why 92% of Property Investors Expect 1-Day Response
- Part 3: Satisfaction Guarantee — Satisfaction Guarantee: Should You Fear Property Management Contracts? (you are here)
- Part 4: Performance Guarantee — Should Property Managers Get Paid When Your Property is Vacant?
- Part 5: No-Hidden-Fees Guarantee — No Hidden Fees – Transparency Required for Riverside CA Property Managers
- Part 6: No-Upfront-Charges Guarantee — Risk-Free Property Management – The Free Trial That Actually Eradicates Fear
- Part 7: Lease Guarantee — Lease Guarantee: Protecting Inland Empire Property Owners From Duplicate Fees When Tenants Break Their Lease
- Part 8: No-Eviction Guarantee — No-Eviction Guarantee: Why Property Managers Should Pay Attorney Fees During Evictions
Related Reading
- Communication Guarantee: Why 92% of Property Investors Expect 1-Day Response
- Lease Guarantee: Protecting Inland Empire Property Owners From Duplicate Fees When Tenants Break Their Lease
- No-Eviction Guarantee: Why Property Managers Should Pay Attorney Fees During Evictions
Full Transcript
Transcript of the video above — Brian Bean, Broker/Owner and Rental Home Advocate, Dream Big Property Management. CA DRE #01346382. Lightly edited for readability.
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.
Hi, I’m Brian Bean with Dream Big Property Management here in Riverside, California. This is Part 3 of our eight-part series on service guarantees. Today we’re talking about unkept promises, and whether you should fear signing a contract with a property management company.
Have you ever signed a listing agreement with a real estate sales broker or a property manager? 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 time frame. That last one is what scares people.
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 this contract? Will it cost me any money to cancel, or will I be forced to stay and work with them until the end? All those questions. The fear takes hold and drives you to some unlikely but very dark places.
I’ve had those same fears. Anytime I’m presented with the request to sign here — usually it’s my cell phone company or an internet provider turning those screws. But in my business, I talk to at least one rental property owner per month who’s under contract with a property manager, but they’re frustrated, they’re unhappy, and they’re looking at their options.
The short answer in those situations is usually that if you have an agreement in place with another property manager, we’re not able to work with you. Because in our world, it’s an ethical breach to steal an active client from another company. And in property management, these agreements are almost always at least one year. Some have exit clauses, but they include large cancellation fees — at least large enough to make it painful and ward off your request.
It does, however, make 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 my business.
That’s why 20 years ago we implemented our Easy Exit Agreement, which 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. Your business will die.
Reality number one: no one left. Everyone stayed. Not because we said so — it was enough to know that they could leave if they chose to. And reality number two: 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 we had to constantly get better.
To improve our service, we had to keep our promises. We turned up our communications. We added and perfected systems. But mostly, we just 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 that they never entertained that thought.
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 is a huge responsibility. It’s over-the-top difficult because it’s often emotionally supercharged.
And yet, the bar to entry in this business 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% of single-family rental homes are managed by their owners, according to a recent property management trends report conducted by the Harris Poll.
That brings us back to the F-word: fear. Rental owners are afraid to sign a long-term contract with a property manager. Two out of three 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 of your management agreement? 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. We’ll release anyone to go hire another PM.
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 we were disappointed in ourselves for not meeting their expectations. In others, the decision to part ways was mutual — and we fired a few clients on our own as well.
Some people just aren’t a good fit for each other. It could be a personality issue. It might be differences in expectations. It might be differences in business philosophy. But at the end of the day, it doesn’t even matter why. What matters is that it’s always better to part friends than to make enemies.
Our core values define how we do business, and two of them specifically apply here. One, own the outcome: perform well and take responsibility for your actions. And two, put the client first: be advocates for our clients and put their financial interests ahead of our own.
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’re going to have to earn it every month.
If you have questions about our Satisfaction Guarantee or any of our other service guarantees, call me directly at 951-314-5402. I’m happy to share. You can also find valuable information on our website, dreambigpm.com. And as always, if you found the information you heard here today useful, please do us a favor: like and subscribe so we can help others just like you. Don’t be accidental about your future. Be intentional to your success.