How To Deal With Vendors In Your HOA

It is not always easy to deal with vendors in HOA communities, particularly if you have a self-managed association. But, with the right foundation, you can effectively hire and maintain good relationships with the best vendors in your area.

How to Deal With Vendors in HOA Communities

A homeowners association is responsible for improving curb appeal and preserving property values. But, self-managed HOAs like yours can’t accomplish these things alone. You need outside help — be it in the form of professional landscapers, cleaning services, accounting firms, or something else entirely.

While you can hire in-house employees to do some of these things for you, it is not always the best way. With employees, you have to worry about salaries and benefits, among other things. In contrast, with a vendor, you only need to consider their fee.

Having vendors, though, also means knowing how to manage them. From the hiring process to maintaining a good relationship with vendors, board members must know what to do every step of the way.

How to Look for the Right Vendor

Looking for a vendor can come with a lot of challenges. As such, you might feel tempted to just go with the first vendor you find. But, all the legwork will prove worthwhile in the end. After all, no one wants to waste their time with a subpar vendor. That will only cost your association more money, and you will have to redo the hiring process all over again.

If you want to hire a good vendor, follow the steps below.

1. Review Governing Documents

The first thing you have to do is check your governing documents. Some associations are very specific about the kinds of vendors they can hire. Your governing documents may contain restrictions or requirements when it comes to vendors. For example, your bylaws might say that vendors should maintain a specified dollar amount in liability coverage. In that case, any vendor that doesn’t meet that requirement should immediately be taken out of the running.

It is important to follow the language in your governing documents. In doing so, you can avoid potential liability and accusations that you failed to do your job well as a board member. If your board is unsure about how to interpret certain provisions, it is a good idea to consult your HOA attorney.

2. Draft and Send a Request for Proposal

A request for proposal (RFP) contains all the details you want from a prospective vendor. It essentially sets a standard so that your self-managed board can easily compare options. Your RFP should ask for payment details, schedules, and insurance coverages. All proposals should be in writing.

Proposals should also consist of specific details pertaining to the project or service necessary. For instance, if you’re hiring a cleaning service, their proposal should outline the extent of their services. Are their services limited to general cleaning or do they also cover specialized cleaning such as HVAC, upholstery, etc.?

You should also request licenses, permits, and insurance documents. These include business licenses, professional licenses, liability insurance, worker’s comp, surety bonds, and applicable permits. Never hire an unlicensed vendor or a vendor with no insurance.

It is best to send RFPs to at least three vendors.

3. Compare Bids

Once you have the proposals, it is time to compare them against one another. Sit down with your fellow board members and take a hard look at what each vendor is offering. Obviously, the weight of each criterion will vary from association to association. For instance, your board might value the quality of work above all else, while another board might use price as a deciding factor.

Speaking of price, a lot of boards may feel the urge to go with the cheapest bid. After all, it will still get the job done but won’t make too big a dent in your budget. This is a terrible way of making a decision, though. Cheap does not always mean best. In fact, more often than not, cheap reflects in the quality of work. A vendor may be able to charge such an affordable price because they use low-quality materials and labor.

A good rule to follow is to reach a balance — a vendor that reasonably meets all of your standards. You can review a vendor’s quality of work by asking them for photos of past projects. You can also ask them for references that you can personally contact. Remember to ask their references about the vendor’s customer service, response to emergencies, and about any red flags they might have spotted. Conducting an interview with the vendor or point person will also give you a sense of their professional attitude, which can impact your working relationship with them.

4. Draft and Sign a Clear Contract

A contract details all of the responsibilities and obligations of each party. It outlines your expectations from the vendor and vice versa. As such, having a clear contract can help you avoid problems and misunderstandings.

Every good contract should include pricing details, payment schedules, a timetable for the project or service, the extent and nature of the services, and the quality of work expected from the vendor. It should also include a termination clause that allows your association to end your partnership if the vendor breaches the contract (like failing to uphold the quality of work promised).

Remember to have an attorney draft and review the final contract before signing. This way, you can deal with vendors in an HOA without legal troubles.

How to Manage and Maintain a Good Relationship With Vendors

Your board’s job does not stop after a vendor is hired. You have to manage the vendors and maintain strong, working relationships with them. But, how exactly can your board do that? Here is how to deal with vendors in HOA communities.

1. Communicate

Good communication is the foundation of any good relationship. Always communicate your expectations to your vendors, and do it from the very beginning. If you have any concerns, relay them to the vendor directly and immediately. Likewise, if they communicate their problems and needs, make sure your board addresses them as soon as possible. Keeping an open line of communication and giving updates at each phase is the secret to building a healthy vendor relationship.

2. Make On-Time Payments

As a self-managed board, you understand how late payments from homeowners can be frustrating. This is exactly how vendors feel as well when you don’t pay your fees on time. Your contract outlines the exact payment details and schedule, so you should stick to it. Don’t expect vendors to give their best performance if your HOA consistently makes late payments. Apart from being obligatory, making on-time payments shows that you appreciate their efforts.

3. Track and Monitor

Vendor management also means tracking and monitoring their performance. Are they holding up their end of the contract and delivering all services as agreed upon? Are they meeting the goals you’ve set for them? This ensures that your vendor isn’t just coasting by. Some boards may feel awkward, but it is not disrespectful at all to evaluate a vendor’s services. In fact, this parameter will let you know when it’s time to cut that relationship.

4. Manage Expectations

Hiring a vendor doesn’t automatically mean all your problems will be solved at once. Vendors are run by people, too, and people aren’t perfect. They can make mistakes and experience delays. As long as the mistakes aren’t too big to be irreversible and the delays are reasonable enough, then your board should give vendors a little wiggle room.

The trick to this is to manage your expectations from the very start. Understand that each vendor may face a different set of challenges depending on the nature of their business. For instance, if a hurricane hit your area and you need some trees removed, your vendor likely has to juggle several clients who are going through the same problems. Similarly, after an overnight snowstorm, your snow removal company probably can’t remove all the snow by morning.

Managing your expectations allows you to be more understanding of a vendor and its limitations. At the same time, it helps foster a strong partnership. After all, you don’t want your association to earn a reputation for being a difficult client.

An Overall Smoother Experience

Every self-managed board will have to deal with vendors in an HOA at one point or another. The hiring process and subsequent relationship management, though, can be a tough road to cross when you don’t know what to do. With these pointers in mind, you can have an easier time managing your association’s vendors.

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