As a property owner, you’re often faced with important decisions regarding the maintenance and repair of your property. One such decision is whether to use the in-house repair service of your property management company or to mandate that the management company uses third-party repair vendors. This choice can have significant implications for your property’s upkeep, your finances, and your peace of mind.
Understanding the In-House Repair Service
An in-house repair service is one that is affiliated with or controlled by the property manager. This setup can present a potential conflict of interest. Property managers are expected to negotiate affordable repairs on behalf of the property owner, but when they’re affiliated with the repair service, they also have a vested interest in maximizing profit for that service.
In Texas, property managers of single-family housing are regulated by the Texas Real Estate Commission (TREC). TREC rules, particularly Rule 531.2, emphasize the fiduciary duty of property managers to place their client’s interests above their own. This includes a clear disclosure to property owners if the management company is affiliated with the repair service.
Pros of Using an In-House Repair Service
- Control Over Costs: Property managers often argue that using an in-house service allows them to better control repair costs, potentially passing savings onto property owners.
- Quality Control: There’s also the argument that it’s easier to ensure quality control when repairs are conducted by an in-house service.
- Convenience and Speed: In-house services may offer faster response times and streamlined processes since they are directly connected to the management company.
Cons of Using an In-House Repair Service
- Conflict of Interest: The most significant downside is the potential conflict of interest. The property manager’s duty to seek affordable repairs might clash with their interest in maximizing the affiliated service’s profit.
- Questionable Savings: The argument of cost savings is somewhat dubious. In-house services are subject to the same cost pressures as third-party vendors. There’s no inherent reason they would be cheaper.
- Lack of Competitive Bidding: Without the inclusion of third-party bids, you might miss out on more competitive pricing or innovative repair solutions.
Our Stance: Choosing Third-Party Vendors
Considering the potential conflict of interest, our management company currently opts to use third-party vendors for repairs. We believe this approach aligns more closely with the fiduciary duty outlined by TREC. By distancing the repair process from our direct control, we eliminate the risk of compromising our primary duty to represent our clients’ best interests.
For expensive repairs to major structural systems or extensive make-readies, our practice includes obtaining at least three bids. This not only ensures competitive pricing but also opens the door to a variety of solutions and approaches that might be more beneficial for your property in the long run.
Conclusion
The decision between using an in-house repair service and third-party vendors isn’t straightforward. While in-house services offer certain conveniences, the potential for conflict of interest and the dubious nature of the cost savings they promise are significant concerns. In our view, and in alignment with our duty as outlined by TREC, third-party vendors offer a more transparent and potentially more cost-effective solution. As a property owner, it’s essential to weigh these factors carefully and choose a path that aligns with your priorities and the long-term well-being of your property.