Do managing agents get kickbacks?

Discussion in 'Management companies, apartments, etc.' started by Pandora, Feb 11, 2018.

  1. Pandora

    Pandora Registered User

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    Does anyone know if managing agents get kickbacks from the contractors, service providers who they send out to the apartments and where the provider eg roofer/plumber/maintenance person invoices the managing company (not the agent)?

    Does the managing agent receive any sort of commission or arrangement fee as they are middleman in what could be quite a lucrative contract? I imagine these payments would be fairly discrete if they do exist. Has anyone any suspicions?
     
  2. Gordon Gekko

    Gordon Gekko Frequent Poster

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    In my experience, they do.

    It is also typical to find the agent’s friends/relatives getting the contracts.
     
    galway_blow_in likes this.
  3. Pandora

    Pandora Registered User

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    Any idea how common it is or what form it takes ? Would they get a percentage of all the work put their way ? Do you think all managing agents do this, even the larger ones?
     
  4. Gordon Gekko

    Gordon Gekko Frequent Poster

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    I don’t know to be honest; my specific experience with one probably doesn’t prove the generality. Once we got under the bonnet of our management company years ago, we were shocked to find the non-arms length pricing that was present.
     
  5. gravitygirl

    gravitygirl Frequent Poster

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    Not sure about kickbacks, but I know in my own case 3 quotes are got for any contract over €200-300 and are re-tendered every three years - I am sure a lot of developments do this, however I have definitely hear of the director's/agent's auntie doing the cleaning type thing also in other developments. I have to say that would be the kind of thing that would make me push for a change in managing agent.

    Would not be surprised if there are kickbacks and difficult to find out in some cases I imagine - in one sense, if the prices for services are competitive and the quality is good I guess I might overlook the former - as you say it is probably common. If the prices looked very out of line it would be a different story.
     
  6. galway_blow_in

    galway_blow_in Frequent Poster

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    put it this way , the tendering process leaves a lot to be desired , they seem to do it in reverse , i.e the guy who gets the landscaping job is not only matey with the agent , he is very expensive
     
  7. Andrew Murphy

    Andrew Murphy New Member

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    It is common practice for managing agents to mark-up supplier invoices if it is they who have done the leg-work gathering three quotes etc. The amount, usually a percentage of the bill, is typically documented in the terms of the contract you have with the managing agent, and will be over and above the annual management fee they charge for bookkeeping, handling property sales, etc.

    If you suspect overcharging has taken place you can mitigate this in future by either managing the tendering process yourself (cut-out the managing agent from the process altogether) or let them continue as usual but find a number of independent contractors you are happy with and ensure they get invited to bid for work.

    Whatever you do, when it comes to big-ticket items such as redecoration of communal areas your management company/committee must take control. I was once on the management board of a development and we were stung a few times by overcharging for shoddy workmanship by the managing agents preferred suppliers.
     
  8. Namdos

    Namdos New Member

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    Not reputable ones.

    As for marking up supplier invoices this would be very surprising.

    I've heard in the some management agents coming in on nearly rock bottom fees and then quietly getting kickbacks from providers employed however.