Service Relationships in the Real Estate Industry: Conflicts and potential solutions in the case of Property Management

Abstract

Purpose: Service relationships have become an integral part of today’s businesses, with all their advantages and disadvantages. The real estate industry, in particular, the property management, also faces conflicts resulting from divergent expectations and interests of customers and providers. While conflict management is widely studied in general, its application in property management is not very common. Analysis of existing approaches in theory and practice for dealing with the conflicts may provide an approach/ methods for resolution of conflicts and improvement of relationships within property management. This paper, therefore, presents the conflict situations in real estate management services and an investigation of approaches for solving these conflicts. Design/methodology/approach: Extensive literature review of the current state of art in the field of conflict management by systematic research forms the base of this investigation. Findings: Information asymmetry and divergent interests can be a trigger for opportunistic behavior. Theoretical approaches like “screening”, “self-selection”, “signalling” as well as controlling and incentive systems try to reduce the risk of opportunistic behavior. A practical reference to conflict of interest as a result of information asymmetry and its resolution is visible in the examples of interim management and the relationship of a commercial agent and the sales manager. A summary of the compiled approaches and first assessment of practical applications such as incentives help to improve the property management relationships sustainably.Research limitations: The scope of this study is limited to examine theoretical approaches which deal with conflicts of interest as a result of information asymmetry and opportunistic behavior. This paper does not engage with the development of a final solution model. Practical implications: A review and investigation into the transferability of the theoretical approaches to the property management conflicts to put it into practice is needed before findings can be generalized. This shall lead to the development of a solution model without conflicts of interest in service relationships. Originality/value: The role of service relationships and the resulting conflicts from divergent expectations and interests comes to the fore. This paper thereby studies conflict management focused within property management, with a view to get a better foundation for sustainable and successful service relationships.