Tried and true

A “best practice,” as defined by Black’s Law Dictionary, is “an optimally efficient and effective mode of proceeding or performing a particular activity in business; it’s a description of such a mode of proceeding or performing prepared so that other people or companies may learn and follow it as a guideline or rule.” In lay terms, a best practice is the best way to perform an activity under optimal conditions and circumstances. As we strive for excellence in the services we provide, best practices can serve as a roadmap on how to provide those services for maximum benefit and efficiency.

Industry standards, on the other hand, are benchmarks that are used to determine whether there’s been a failure to adhere to the most basic minimum expectations in each situation. Failure to meet these minimum standards is the basis for many of the lawsuits we see in the real estate industry. In litigation against property owners and property managers, it’s critical to determine whether the industry “standard of care” was met.

In some cases in the real estate industry, a best practice can also be an industry standard. In other cases, they may be different—sometimes significantly different. When there are various methods and ways to perform a service, function, or task, sometimes the outcome falls somewhere between these two extremes.

Since 2010, IREM has published best practices for the delivery of real estate management services. These practices are reviewed regularly and updated as needed. IREM has just released a new and revised edition of this publication that should be reviewed by all property owners and professional property managers. “Best Practices: Real Estate Management Service” includes 62 best practice statements organized into four categories: Management company, Client relations, Management of the property, and Tenant/resident relations.

Incorporating these best practices into your company’s operations ensures that you are operating in accordance and compliance with other real estate management companies that strive for excellence. They may also serve as an aid to the defense of your case should you find yourself facing a lawsuit filed against your firm.

Adopting these best practices is not just prudent for protecting property owners and professional property managers from the negative results of litigation; it may also give your firm a competitive advantage in the marketplace as you compete for third-party business. Property owners are always interested in minimizing their risk in owning real estate, so having a third-party professional property manager that develops and implements policies and procedures that are consistent with those best practices is certainly a worthy goal. 

As the result of a continuously evolving business climate, advancements in operating practices, and additional knowledge gained through mutual collaboration, IREM formed a working group of competent industry professionals from a broad cross section of product types and geographic locales. This working group discussed, debated, and refined their ideas and incorporated their practical experience to create additional new practice statements while updating others. Included in the newly revised edition are new practice statements on the topics of data security, news media response plan, systems efficiency, contracted vendors, and tenant/resident privacy.

Other significant updates were made to the existing practice statements concerning client property insurance; insurance claims; property security; environmental, health safety and hazard control; and tenant/resident safety. Let’s explore a few of the practice statements a bit further.

Data security

Data security is the process of protecting digital data from identity thieves, data breaches, or devastating cyberattacks. With the increased use in society—and especially in the real estate industry—of computers, laptops, tablets, smart devices, websites, networks, and other digital equipment, it is extremely important that management companies emphasize the importance of data security and instill a culture of safeguarding the confidential data that is entrusted to real estate management organizations.

Data security is critical for companies of all sizes, whether large global corporations or small local firms. It lies at the core of running a successful business. It gives others the confidence that their data is being collected, transferred, stored securely, and reviewed only as needed. Data security can make or break your organization; one single vulnerability is all that an attacker needs. Many times, these breaches are unwittingly through third-party vendors with access to your systems, so your approach needs to include your vendors and suppliers, too. Data security is important for companies to ensure the safety and confidentiality of their data related to clients, employees, tenants, and others. Implementing data security measures ensures business continuity in today’s data-driven environment. Not only does it help to avoid data breaches, but it also shields your company against unnecessary financial costs, damage to your company’s reputation, and a loss of company profits. Having a broad, technologically up-to-date data security plan in place lowers the risk of a data security breach and is necessary in the current business environment.

News media response plans

In today’s fast-paced information technology environment, we have become accustomed to instant media reporting and the “24-hour news cycle.” We obtain our news through various sources: broadcast news, print media, and online. When newsworthy events occur on a property we own or manage, news media sources routinely show up on the scene uninvited and with no advance notice to report their own version of the “news.” Their objective is to deliver a fast-breaking news story that will generate clicks, and accuracy may not be their top priority. Recall the old journalistic adage: “If it bleeds, it leads.” The news media, combined with citizen “journalists” in social media, relish bad news that can be sensationalized, and there are rarely any repercussions for the spreading of false information.

Therefore, it is imperative for property management professionals to develop and implement a coordinated approach to addressing the media in a prompt manner at an established location to minimize rumors by providing consistent, accurate, complete, and timely information from verified sources. Recognizing the media as a resource to help you deliver pertinent, critical, accurate information minimizes distractions for emergency responders and can reduce chaos during emergency situations. Advance planning for these events and determining how the company and its employees will represent themselves to the news media is vitally important to ensure the company projects a favorable impression in the community.

Systems efficiency

Advances in technology and evolving business concepts regularly create opportunities for innovation and improved systems efficiency. By reviewing industry journals and publications, management company leaders may identify new ideas and opportunities that could enhance or improve their current practices, capabilities, and performance. By routinely identifying and exploring new ideas and evaluating them, compared to your assessment of the quality and efficiency of current operations, a management company can maximize its efficiency and performance in the delivery of services to its clients.

Contracted vendors

Contracted vendors play an important role in providing the services necessary to operate a property optimally. Providing services beyond those of the employees working on the property, they are an extension of the management team. A property manager is only as good as the entire team, and no matter how good the in-house staff may be, a weak contracted vendor can wreak havoc on even the finest customer service reputation. It is incumbent upon the management company to determine the appropriate scope of work needed from each contracted service provider and to retain the services of a qualified and experienced company that can best meet those needs while optimizing value.

Tenant/resident privacy

Privacy is a concept that is much discussed, but not often fully appreciated as an important issue in property management, with serious negative implications if proper policies and procedures are not in place. Our residents and tenants have the right to determine whether, how, and to what extent biographical, personal, and/or financial information about them is communicated to others, especially sensitive and confidential information. The business of leasing and managing property requires the collection and storage of a considerable amount of sensitive and confidential information in the normal course of business.

Individuals have the rightful expectation that all the data they provide will be kept private and not shared with others, except as agreed upon in writing in advance for application screening or the like. Failure to protect this information violates a person’s privacy, may be a violation of laws and applicable regulations, and can lead to identity theft or other unintended consequences. The management company should develop, maintain, and enforce policies and procedures on maintaining tenant and resident privacy and determine under what circumstances information must be shared. 

Member benefit

The updated “Best Practices: Real Estate Management Service” is included as a member benefit for IREM members, and is available for purchase on irem.org.