When you're looking for a professional service—whether it's an accountant, attorney, contractor, electrician, realtor, or property manager—it's easy to focus on one question: “How much do you charge?”
But that may not be the most important question you can ask.
The Difference Between Price and Value:
When I need help solving a problem, I'm not looking for the cheapest option. I'm also not automatically looking for the most expensive option. What I'm really looking for is value.
Value is the combination of expertise, efficiency, results, and the ability to solve a problem effectively. In many cases, the cost of a service matters far less than the quality of the outcome.
A lower price doesn't always save money if the service provider fails to deliver results. Likewise, a higher fee may be well worth it if it creates measurable returns and eliminates costly mistakes.
A Property Management Example:
Let's use our own company as an example.
At Redwood Prime, our standard management fee is typically around 10% of collected rents, though fees can vary depending on the services required. In many cases, that's higher than what some competitors in our market charge.
The natural follow-up question shouldn't be, “Why is your fee higher?”
It should be: “What value do you provide for that fee?”
Our goal is to generate returns that far exceed our management costs by optimizing every aspect of a property's performance.
How Value Is Created:
Property management isn't simply collecting rent each month. There are dozens of factors that impact a property's profitability and long-term success.
Some of the ways we focus on creating value include:
• Maximizing rental income through strategic pricing
• Reducing unnecessary maintenance expenses
• Using technology and AI tools to efficiently triage maintenance requests
• Helping tenants resolve simple issues before costly service calls are needed
• Managing collections effectively
• Taking prompt action when lease enforcement becomes necessary
• Protecting owners from avoidable risks and expenses
• Improving overall portfolio performance
Each of these areas can have a meaningful financial impact that often outweighs the management fee itself…Ask Better Questions…
When comparing service providers, don't stop at asking about commission rates or fees.
Ask questions like:
1. How do you handle maintenance requests?
2. What systems do you have in place to reduce costs?
3. How quickly do you respond to tenant issues?
4. What is your process for collections and lease enforcement?
5. What results can you demonstrate through data and performance metrics?
The answers to these questions will tell you far more about the true value of a service than the price alone.
The Bottom Line:
Your real estate portfolio is likely one of your most valuable assets. The same principle applies to nearly every professional service you hire.
Instead of asking, “What's your fee?” Ask: “What value do you provide, and what evidence can you show that proves you're worth it?”
Price matters, but value is what ultimately determines whether you're making a good investment.
That's this week's Wisdom Wednesday: always look for value first.
