December 12, 2010-St. Petersburg Times
Real estate veteran Elizabeth Miller expected the ranks of property mangers and leasing agents to swell last year as home sales declined.
Miller predicted that many sales agents would try to supplement their income by leasing and managing rental homes. She also knew the trend would cause problems - most sales agents don't know anything about leasing and managing homes.
"They're trying to make a buck," said Miller, who works out of Pinellas County. "They don't have a clue. If you're going to do rentals, then you ought to know what you're doing. It's a whole different thing."
The trend, and the resulting fallout, is spreading across the United States.
Texas and Nevada now require additional licenses for property managers because so many sales agents are taking on the duties, said Tony Drost, president-elect of the National Association of Residential Property Managers.
Drost understands why sales agents want the added work. Collecting leasing commissions and management fees can create a steady income stream. He said the management and leasing work can pay off again when renters become buyers and keep the same agents, allowing those agents to collect the sales commission.
But the national organization is concerned, he said. He warned it's more than just placing a tenant in an empty home.
"Realtors are not getting the training to do it properly," Drost said from Boise, Idaho. "It's not just all about collecting the rent. It's a growing, growing problem."
The collapse of the housing market has forced sales agents to find other ways to make money. Commission checks are drying up as thousands of homes wallow in short sales or foreclosures.
And the homeowners whose houses sit on the market for months are faced with the decision of either renting their homes or keeping them vacant. That has created opportunities for agents to convert sales listings to rental listings.
Dave Kushner, head of Bay Area Property Management in Tampa, said agents are shelling out cash for a one-day class on renting property. The courses are good but don't produce any experience, he said.
He is bothered by the trend of untrained agents moving into rental management and has heard about some charging $250 to drive prospective renters to rental homes on the weekend.
"A lot of people are coming out of the woodwork," he said.
Florida law requires a license for agents to show property to prospective buyers or renters. But the law does not require licenses for property managers. In addition, many agents know very little about the federal Fair Housing Act or the Florida Residential Landlord and Tenant Act, experts said.
The lack of training inspired Miller to act.
The 17-year veteran contacted the Pinellas Realty Organization in February. She and the group created the Leasing and Property Management Council. The committee will begin holding monthly classes in January to educate agents about managing and leasing property.
Miller, a director with ReMax Bayway Islands in Tierra Verde and past president of the bay area's property managers group, said the classes will teach agents how to stay out of trouble.
"We're going to be doing a lot next year," she said.
Kristin Madafferi, a broker associate at Engel & Völkers in Clearwater, agreed about the training. She started selling in 2004 and took on managing two years later, but only after learning the laws from a lawyer. She now devotes about one-third of her time to property management.
Madafferi stressed that managing and selling complement each other, but she warned they are different. "You need to know what you're doing," she said.
The conversion from selling to leasing and managing produces cash.
For example, an agent might wait months to receive a commission check from a sale. But the agent can earn a referral from a property manager for finding a renter. Or an agent who takes on property management could collect a percentage of the initial security deposit and rent payment, along with cuts of monthly rents.
Still, experts acknowledge that it takes dozens of referrals to equal one sales commission check.
A recent seminar drew 160 real estate professionals to the Pinellas Realty Organization. Legions of experienced agents learned about leasing and property management, said Jan Dean, the director of information services.
She teamed with Miller, the ReMax agent, to form the leasing and management council. Dean has worked in the industry since 1980 and said she has never seen a time like now when agents are gravitating toward leasing and managing properties.
"This is a whole new phenomena in the last year," she said.