Comparing the merits of a managing agent and an in-house team

SHOULD private home owners directly employ staff to run their estate or should they delegate the job to a managing agent? Associate Professor Alice Christudason from the National University of Singapore's Department of Real Estate says both approaches have their merits.

POINTS TO CONSIDER WHEN HIRING A MANAGING AGENT (MA)

• In general, you have greater assurance of professionalism, although there is no guarantee of minimum standards since there is no licensing requirement for MAs in Singapore.
• There will be a better chance of up-to-date technology being used, as property management firms invest heavily in computer hardware and software.
• The condo can draw from the MA's entire pool of manpower and resource expertise. The firm, for example, can dispatch at short notice additional staff to any of its clients when it is required.
• When the MA makes bulk purchases of items, the condos can benefit from economies of scale.
• Management corporations have to pay a monthly recurring MA fee that ranges from $750 to $5,000. This fee is over and above all other costs and fees necessary for the proper maintenance of the condo.
• As the MA is the go-between for home owners and the staff based at the condo, communicating and dealing with the condo's staff can be a problem.
• As an MA looks after many different condos at a time, there may be times when its resources are stretched and diverted elsewhere to meet the more pressing needs of other estates.

POINTS TO CONSIDER WHEN HIRING AN IN-HOUSE MANAGEMENT TEAM

• There is usually greater continuity with an in-house team.
• Each MA can be appointed for up to three years at a time. If the home owners decide to hire a different MA instead of renewing the contract of the previous firm, there could be a chance that the entire system of management will be overhauled.
• The council has better and more direct control over the maintenance team as there is no third-party involvement.
• Management corporations may have to expect comparatively lower standards of performance from the in-house staff.
• MA firms have a policy of rotating staff, exposing them to different issues and building up their experience. The staff of an in-house team are confined to one estate, which limits their work experience.
• If the in-house staff are negligent, the management council directly employing the in-house team may be liable for their actions. The risk is lower if the council hires an MA.

Source: Straits Times, 1 Aug 2009