As any board member will tell you, managing the day-to-day operations of an association can be a daunting task. Many associations hire a professional management company to assist them with their responsibilities. But with so many management companies out there, how do you know which one is right for your association? Below is a step-by-step process that our firm has found to be very effective in finding and hiring the right management company.
Step 1: Identify and create a time line for the selection process. Form a committee who can be dedicated to the selection process. This committee should identify the association’s needs, specifically what is needed and expected from a management company. If your association currently has a management company, make sure you review the management contract so you can determine when you need to provide them with notice that you terminating the agreement.
Step 2: Start developing bidding specifications. Make sure you ask yourself these two questions: 1) What is the association’s budget for management services?; and 2) What level of management does the association require?
Step 3: Identify a list of pre-qualified companies. Only consider companies that specialize in association management. Speak with board members of neighboring associations who have similar needs to your Association and ask if they feel their association is being successfully managed. Remember that association management is not a one size fits all situation. The needs of your association may be very different than the needs of neighboring associations.
Step 4: Narrow the field. Narrow your options to 3 to 5 companies by speaking with them and asking if they are willing to submit a bid to your association. Have a general description of the association ready to share with the company.
Step 5: Develop a request for the bids. The request for a bid should contain the following information and requests: 1. a date to tour the property (do not accept a bid from someone who has not toured the property); 2. the date the bidding closes; 3. all contact information for the association and where to send the bid; 4. a summary of the association (include the number of lots/units, acreage of common areas, special features, type of construction, current annual budget and current management expiration date); 5. the general needs of the association (make sure that the general bid covers all of the association’s basic needs); 6. ask for references or credentials; 7. make sure to ask for the specifics. Ask about the company’s basic management fee, hourly costs for service not covered in the basic fee, independent contracting items and associated costs, collection costs for delinquent accounts, board and meeting charges; proof of fidelity and/or liability insurance, workman’s compensation and other insurance policies; charges for mass mailing and procedures; credentials that the assigned manager would possess; support services including accounting and services coordinator; emergency procedure details; and a list of specialized services.
Step 6: Close bidding, open bids received. The board should compare and review the bids in an open discussion. The board should narrow down the candidates it would like to review further.
Step 7: Review candidate’s references, licenses, bonds, etc. The committee and the board of directors should review and validate all of the candidate’s licenses, references, etc. Only call back the companies who have proper and complete credentials. We also recommend that the Board visit the management company’s office to get a better sense of how the company is run.
Step 8: Identify the leading candidates and conduct a final interview. Ask the manager who will be assigned to the association to be at the interview. Ask the manger questions like how many associations they currently manage or how they handle homeowners and difficult people. This is your chance to ask any and all questions. The more you know the better you will be able to determine which company best fits your association’s needs!
Step 9: Schedule a meeting with the association’s attorney to review the management contract before you sign. Allowing an attorney to review the contract will help the board understand all of the terms. An attorney can also make sure that the transfer period between management companies has been accounted for in the contract. A management contract will be one of the most important contracts the board will agree to and it will have an enormous impact of the day-to-day business of the association. The board needs to make sure that there are no lingering concerns when they sign the management contract!
Step 10: Schedule a meeting with your new management company! Use this meeting to sign the contract, determine any turnover dates and provide your new management company all of the association’s documentation.
This may seem like a long process, but it is important that the board really take their time when selecting a new management company. This decision is not just about the association’s finances, it is also about the best fit for the association. Following these steps will allow a board to ensure that they have properly vetted the new management company and they can be sure that they have done what is bet for the association.