5 Vendor Management Mistakes To Avoid

5 Vendor Management Mistakes To Avoid on vendorsmart.com

One of the most important responsibilities of property managers and HOAs is choosing vendors to perform maintenance and upkeep. Make the wrong choice and everyone pays the price.

From landscape companies and construction to repairman and exterminators, each of these vendors must be able to provide necessary services to ensure the safety and satisfaction of your residents/owners. Vendorsmart put together this list of the top 5 mistakes made by management when it comes to vendors.

The Importance of Choosing the Right Vendors

As a property manager or HOA, it is your duty to spend funds wisely and efficiently. One of the biggest expenses facing any condo or community is maintenance and upkeep. Make a mistake in choosing a vendor and you could not only experience shoddy work and unhappy residents, but also pay a financial price.

Mistake #1: Not properly vetting vendors.

Sometimes the prospect of vetting vendors can be overwhelming. While property managers may have more experience hiring a company to do landscaping or painting, members of an HOA may not necessarily have that luxury. Even professionals can end up making hasty decisions if they feel under pressure to get the job done. There may even be pressure from another board member to use the services of “XYZ” company because “they use them all the time.” As a consequence, many managers and HOAs fail to do the necessary due diligence in vetting vendors. Start by taking advantage of the many free resources that are available, such as licensure boards, the Better Business Bureau, and online reviews. These days you can find all kinds of customer reviews on various websites. Be sure to Google the company and scour social media to look for mentions. Another important thing to do is check out the company’s website. You want to ensure that they have the capability to handle the work. If you are a property manager of a large retirement community, you want to be sure a potential landscape company has the staff, reputation, equipment, resources, and experience to provide adequate service.

Mistake #2: Not specifying contract terms and conditions.

A vague contract from a vendor is simply asking for trouble. You want contracts to include everything the company is offering so there are no “surprise” expenses or unexpected fees.

Here are things to get in writing:

  • Exactly what services will be provided and how often?
  • How will services be requested?
  • How will services be rendered?
  • What are timelines for providing services?
  • Will you pay a monthly retainer fee or work on an as-needed basis?
  • How many hours a week/month will the company work?
  • Are there extra fees for particular services or emergency services?
  • What happens if service is needed during off hours or weekends?
  • Who do you contact for emergencies?

If the contract does not include these details, you must push to get them. Otherwise, you could find yourself having to pay hefty fees for services you thought were covered in the contract.

Mistake #3: Not being familiar with (or ignoring) HOA governing documents

HOAs, like any organization, have specific guidelines that must be followed. These guidelines set rules for how vendors are chosen, what a vendor is paid and for what specific services, the length of vendor contracts (for example, many HOAs prohibit contracts longer than one year). Some rules exist because of government regulations and compliance issues, and ignoring them could mean opening up the board to legal actions. Whether you are a property manager or a HOA board member, it is imperative you know the rules of governance. Claiming you “didn’t know” about a rule will not work as a defense, either.

Mistake #4: Not having a plan to end contracts.

There needs to be some provision in a contract that specifies how and when a property manager/HOA can get out of a contract. If a vendor is not providing adequate service or there is some other issue that leads to the contracted work not getting done, you must have a clear “exit strategy.” If the contract is vague about termination procedures, you must get specific. The last thing you want is to be stuck in a contract if you are dissatisfied with the service being provided. This will also provide legal protection if the vendor tries to take action against you.

Mistake #5: Not being transparent with owners about new vendors.

We understand that is impossible to please everyone. There will always be people who are predisposed to complain about everything. However, it is in your best interest to be transparent with owners when it comes to hiring new vendors. All HOA members or residents should be kept abreast of which companies are being considered, as well as your final choice of vendor. This way owners feel like they have a say in the process, which is important since your choices do affect their quality of life in the community. If you come off as secretive, or it looks like you are favoring a company out of prejudice or personal gain, you could end up in hot water with the owners/residents.

Managing a property is a big responsibility and one of the most important aspects is choosing the best vendors to keep your property maintained and compliant. Use these 5 vendor management “mistakes” to help you make the right choice. If you are a property manager or HOA and you need assistance with any step in the process of vetting and choosing vendors, Vendorsmart can help. Contact us to get started.