The Importance of Specialization
The property management firm that I’ve been with since 2011 has always held a firm line in that, while technically licensed by the state to do so, our brokers may not engage in real estate sales transactions. We focus on what we excel at: the leasing and management of residential rental property.
As the laws governing landlord/tenant relationships have grown more complex in Washington State (and in particular around the Greater Seattle and Tacoma areas), we have seen an increase in what we refer to as “management takeover” clientele: owners of tenant-occupied properties have approached us to take over the management, whether they had been self-managing or they are moving their business from another agent, or similar.
When approached with a takeover opportunity, my first question is always, “What’s wrong?” Something clearly has changed… it could be as simple as the owner moving away and wanting to keep someone local overseeing the management, or there could be terrible problems with maintenance, tenant behavior, rent delinquency, and communication… you name it. Not every opportunity is a good one.
One of the common threads we have uncovered is that real estate brokers who focus primarily on sales transactions and do leasing & management “on the side” or “as a favor” to the client often miss many of the most important steps. One silver lining of the growing complexity of landlord/tenant law has been a shift in direction by the managing brokers of many sales offices, instructing their teams to focus on what they do best (sales) and refer out leasing properties to specialists (much like they bring in a third-party home inspector when representing a buyer client, rather than attempting to do it themselves “as a favor”).
Perhaps the most common mistake that we see is the lack of a formal, signed move-in condition (inspection) report. Washington State requires that both landlord and tenant sign off on a pre-move-in condition report as the basis for a landlord to hold a tenant’s security deposit. If there is no such signed document, the tenant can ask for their deposit to be refunded at any point during their tenancy. (When conducted properly, the landlord holds the deposit for the duration of the tenancy and then resolves any expenses or charges, and applicable refund, at the time of move out). Speaking of security deposits, we also find that far too often, these funds are held by landlords or ill-informed licensees in the same bank accounts where rental income funds are deposited. This is known as the co-mingling of funds and is prohibited by law.
Accurate record-keeping, in general, is an area where we have also seen a lot to be desired, such as the lack of a full tenant ledger. There is a program run by the state department of commerce that allows landlords to claim assistance funds in certain situations, but lack of a full tenant ledger renders them ineligible.
One of the more problematic scenarios that we encounter is a lack of Fair Housing compliance, which can be very troubling. For example, “source of income” has been a protected class in WA state since 2018. What this commonly refers to is the use of a Housing Choice Voucher (aka Section 8 voucher), which is to be considered just the same as a paycheck stub or any other form of funds or income.
Unfortunately, some seven years later, we still get prospective tenants asking us, “Do you accept Section 8?” Prospective tenants should not have to keep asking this question, however, they do because they are being told by other (uninformed or ill-meaning) landlords & licensees that Section 8 need not apply. This is a HUGE violation of Fair Housing; it sets these landlords up for significant legal/financial liability, and ultimately it makes the housing search more difficult for the prospect. A lose/lose scenario all the way around.
To bring this full circle: it’s not uncommon to see these part-time or uninformed landlords (and/or agents) be identified as the reason for landlord/tenant law becoming more complex in the first place. The more often prospects are told that Section 8 vouchers are not allowed, the more opportunities they have to take their stories to the Fair Housing board, to the press … and ultimately to lawmakers who have largely taken it upon themselves to fix these problems with broad strokes, and paint a narrative that landlords are bad actors, one and all, existing to prey on the vulnerabilities of tenants.
As an industry of leasing and property management professionals, we can change this narrative. Real estate brokers who focus on sales should continue to do so – that is what their brokerages, accounting departments, and educational platforms are built for. On the other hand, leasing & property management brokerages are built for what we do … not sales, but rather leasing, maintenance, rent collection, and proper handling of security deposits in our trust accounts. Not to mention Fair Housing compliance and all things geared toward facilitating a cooperative partnership between landlords and tenants. We can take a lot of pride in what we do, which is provide much-needed rental housing to our local communities. We can do it correctly, with empathy and precision, with integrity, and we can show everyone that we provide value beyond measure. We specialize in what we do, and we excel at it. That’s best for our clients, and that’s best for tenants. It’s a win/win.
Cory Brewer is the Vice President of Residential Operations at Lori Gill & Associates Property Management in Seattle, WA. He oversees a team of 35 property managers who collectively manage 2,200+ rental homes throughout the Greater Seattle Area. He may be contacted via wpme@windermere.com. Visit their website: wpmnorthwest.com.