Protecting your rent roll during the sale process

When you own a real estate agency, your rent roll makes up a huge part of the value. You put a lot of blood, sweat and tears into building it up and maintaining it.

Despite all the hard work which goes into building a rent roll, one of the threats it faces is from the people who come into contact with it every day. An example I came to hear about involved a disgruntled property manager defecting to the competition after a rent roll changed hands. Once they had established themselves at the new business, they began ringing landlords and convincing them to jump ship.

The ethics of property poaching

Unfortunately, every industry has its mavericks. There is a lot of talk on real estate industry websites and discussion forums about the practice of poaching, with the consensus being it is a dirty way to operate.

As one writer points out on REB, if a property manager chooses to engage in such unethical ways of building their customer base, they must also be prepared to accept the consequences it will have on their professional reputation.

Rumours of grubby behaviour travel quickly, particularly in an industry built on communication. While many agents believe it is unethical to take other people’s clients, they may be very happy to name and shame the ones who do.

What’s more, if an employee has no hesitation in soliciting clients from their previous employer, their new employer should be equally wary of history repeating. For this reason, agents need to remember their reputation is at stake when building up their client base.

Preventing the poachers

To protect everyone from unpleasant business practices, the code of conduct at the Real Estate Institute firmly recommends against any agent poaching a client you know is under someone else’s authority. However, should a client come to you, you can accept the business, providing there is not existing exclusive authority.

When it comes to protecting your own rent roll against rogue agents who may choose to ignore the code of conduct, a little forethought can go a long way.

Ambitious agents are known to move about regularly within the industry, so when recruiting someone new, include a clause in their contract to reduce client ‘theft’. Ask your new talent to formally agree to not actively chase your clients for 12 months after they have left the business. When they sign the contract, make them aware of the consequences of breaching it.

Talk to your landlords as well. Remind them to always contact you first if they are unhappy and to come to you for a counter-offer should they have a deal on the table from another potential property manager.

To further prevent a disgruntled employee taking advantage when a rent roll is passed to a new owner, let them know the sale has occurred. Keep them up to date with changes and give them the opportunity to contribute their suggestions and requests. Let them have their say and touch base with them about any concerns they may have.

Taking legal action

If your employee has signed a contract but has gone ahead and started soliciting clients, as their ex-employer you may have a legal right to request an Anton Piller Order. This is a court order requiring one party to allow another party to enter their premises to inspect, remove or make copies of documents or other items which might form evidence in an action or proposed action.

You will need a lawyer to help you with this type of order as it is only applicable if there is clear evidence and a strong case against the accused person.

The reality of ex-employees soliciting their former landlords is one you must be aware of long before you even consider selling your rent roll. Come up with an anti-poaching plan in advance and share it with your potential buyers so they know they are getting a robust, secure list of properties to manage.

BDH Solutions have been buying and selling rent rolls for over 30 years. Keep up with our latest listings here.