Your HOA Board of Directors exists to serve the needs of the community and to make sure that all official HOA business proceeds smoothly and efficiently. Meanwhile, your community manager is present to assist with day-to-day tasks, including administration, finance, record-keeping, and beyond.
So what about your HOA vendors? Within any community association, it is important to enlist the services of lawn care professionals, maintenance crews, bookkeepers, and other professionals who have specific areas of expertise. Part of the Board’s job is finding the right vendors, vetting them, contracting them, managing them, and ensuring the best rates and the highest standards of services on the HOA’s behalf.
The vendor procurement process is not as easy as you might think. The Board of Directors cannot simply call the first lawn mowing service listed on Google and offer them the job. There is a bit more to it than that. Working with a management company can bring clarity to the process, but in the meantime, here are a few considerations for your Board of Directors to make while assessing HOA vendors.
How to Select an HOA Vendor
As you seek the right HOA vendor, keep in mind your ultimate goal: You want to find a vendor who can fulfill some basic services to the community association in a satisfying way. And, you do not want to pay too much money when you could get a comparable service from a different vendor, for a fraction of the price. As you prepare to work with your HOA management company on vendor procurement, here are a few tips to facilitate sound decisions.
1) Start by consulting your HOA’s governing documents.
The first step in the process is to sit down with your community manager, or another representative of your HOA management company, to verify what your governing documents have to say about vendors and vendor contracts.
Keep in mind that your HOA may have certain rights but also certain restrictions with regard to the vendor procurement process; these rights and restrictions will be clearly outlined in the governing documents. By knowing these documents inside and out, you can make certain that you are legally compliant in your search for the right vendor.
And, if you have any questions or ambiguities about these governing documents, be sure to talk it over with your HOA management company before you get much deeper into your vendor search.
2) Remember the difference between employees and contractors.
As you search for HOA vendors, it’s crucial to know the distinction between hiring an employee and enlisting an independent contractor.
If you hire an HOA employee, that brings a number of legal obligations that will cost a lot of money. For example, when you hire an employee, you will need to provide them with benefits, which comes straight from the HOA’s bottom line.
For most smaller projects, you can engage your HOA vendors as independent contractors, which allows you to retain their services without having to pay for employee benefits.
Again, if you have any questions or uncertainties about this distinction, make sure you talk it over with your HOA management company.
3) Develop a budget for your vendor.
A critical aspect of serving on the HOA Board is maintaining your fiduciary responsibilities to the community. In other words, part of your job is being wise and discerning in how you steward the community’s assets and resources. This is an important thing to remember as you seek a vendor: You need to demonstrate that any vendors you select represent the best possible value for the association.
Specifically, we recommend having a concrete budget in place for your vendor search. Work with your HOA management company to determine how much money your association should spend on the project or task at hand. Have a clear sense of how much money your association should spend for each project, and only consider vendors who fit within your predetermined budget.
4) Shop around.
As you work with your HOA management company to find the right vendor, remember that you do not have to go with the first vendor you find. In fact, the wise approach is to interview a few different vendors, get different bids or quotes, and compare the different options that are available to you.
Gathering several quotes can help provide you with a ballpark of roughly what’s fair; based on this information, you can then determine which quotes are outliers, and eliminate them from consideration.
Remember that you’re looking for the best overall value, not necessarily the cheapest price. For example, if one vendor charges a slightly higher rate but includes some additional services or consumer guarantees, they may ultimately represent the best bet for your HOA.
Something else to remember is that, if you choose a vendor who does a poor job, your association members will be frustrated. They will rightly view it as a waste of the HOA’s capital. As such, it’s always important to ensure that you are not sacrificing quality assurances for a cheap price point. Including your HOA management company in the interview process can help you strike the right balance.
5) Check the references.
We mentioned above that one of the most important steps in the vendor selection process is verifying that the vendor in question will provide a quality service. One way you can do this is by asking vendors to furnish references, then actually taking the time to check those references.
Ideally, you will be able to follow up with at least two previous clients. Better yet, see if you can get a couple of references from other community associations, comparable in size and scope to your own. This can supply you with great insight into the vendor’s ability not only to do their job well, but to manage the needs and expectations of community associations.
6) Verify insurance, licensing, and other credentials.
Work with your HOA management company to make certain that your vendors have the right paperwork in place. Depending on the type of vendor you’re dealing with, this may mean insurance, licensure, or other types of credentials.
If you ask for this kind of documentation and your vendor seems reluctant or hesitant, that should be a huge red flag. Reputable vendors will emphasize transparency, and be more than willing to prove to you that they have the necessary credentials to serve your association.
Property management companies can be really helpful in explaining the specific types of credentials that you should look for. Your HOA management company may also be willing to help you out by checking the vendor’s license number or vetting their insurance information enabling you to make a prudent choice on behalf of your association.
7) Don’t forget vendor contracts!
Work with your HOA management company to develop contracts for each vendor. Simply put, a contract is an important way to clarify expectations, specify the scope of work, and reach a consensus about pricing. Your contract protects the interests of the association, but it can also be an important protection for the vendor.
A contract is an important legal document, and as such, you will probably want to have an attorney or a member of your HOA management company look it over before you sign.
The bottom line: Contracts allow you to protect the interests of your association, and potentially to lock in price brackets that will save your HOA money over the long haul.
8) Ask about any bulk pricing or other discounts that are available.
A final step that we recommend: Working with your property managers, inquire as to whether the vendor in question can offer any special pricing terms. If you have a large HOA and can guarantee the vendor lots of work over a long period of time, they may be willing to offer you bulk pricing. This can be a really great way to save your HOA money while also establishing a mutually beneficial arrangement with your vendor of choice. Again, your property manager can guide and advise you in making sound business decisions here.
Choosing the Right Vendor for Your HOA
This may sound like a long and intricate process, and in some cases it can be. But the reason for this is that vendor selection can have a huge impact on the quality of life within your HOA, as well as the financial health of your community.
Remember that the most important thing of all is to strike the right balance between quality of service and affordability of service. In this way, you can earn the trust of your entire community, proving to them that you are acting in their best interests and providing them with real value. And again, working with property managers can really be important here, allowing you to do what is best for your association. We would certainly encourage finding an HOA management company that has experience with vendor management in your area; remember that the relationships between your HOA management company and local vendors can potentially save your community some money.
Contact Kuester Management Group to Ask About Vendor Selection
For more than 50 years, Kuester Management Group has been one of the most trusted HOA management companies in the Charlotte and Myrtle Beach areas. We have ample experience working with homeowners associations of all sizes, as well as condominium associations. HOA management services include guidance and oversight of vendor procurement. Additionally, HOA Board members can benefit from the extensive ties and deep relationships we have with vendors throughout the Carolinas. Our other services include financial management, record-keeping, assistance with HOA governance, coordination of community maintenance, board member training, communication with homeowners, and much more.
Are you seeking assistance with HOA management in Charlotte, NC, or HOA management in Myrtle Beach? We would love to hear from you, to talk further about your needs, and to tell you how we can help. To request assistance navigating the vendor management process, we welcome you to contact Kuester Management Group at your next opportunity to do so. We look forward to hearing from you soon!