HOA Management: Mistakes to Avoid in Vendor Bidding

HOA Management: Mistakes to Avoid in Vendor Bidding on vendorsmart.com

Vendor relations can be tricky for association managers. Watching out for these 4 mistakes can prevent financial losses and legal troubles

Managing vendor contracts is an important aspect of community management, but many property managers and HOAs don’t do their due diligence when receiving and approving bids. It’s important to take this responsibility seriously – homeowners associations have significant legal and ethical responsibility to ensure that the community is using its funds appropriately and keeping the property running smoothly.

Making these mistakes when accepting bids can cost a lot of money and create other troubles. Fortunately, many of these problems are entirely avoidable. Read on to learn what not to do during the bidding process and beyond.

1. Not doing research on vendors

Say a property has a leak in the clubhouse plumbing or a landscaping issue. The HOA wants to get it fixed quickly, so management runs a short online search and contacts the first result on Google. By the time the vendor is finished and the problem is solved, other issues have arisen. Maybe the work wasn’t done to satisfaction. Or maybe the invoice comes in the mail and it’s three times the market rate.

Failing to do research on vendors can be an inconvenient – and costly – mistake. What initially saves time can end up costing the association big in the long run.

To avoid this misstep, management should take time to do a little digging before hiring a professional. Online review boards, licensure boards, and company testimonials are easy ways to vet a service provider before giving them the go-ahead to get to work. 

2. Skipping the bid process

Nobody likes going through the bidding process. It’s time-consuming, finicky, and requires careful attention to contract details. While all of this can be a headache, it’s vital to ensuring that the community has a good grasp on the pricing and terms common to the market.

Negotiating a fair deal for the community means doing the dull work to get the appropriate vendor and contract. To make things easier, the association should try to start the bidding process 12-24 months out. This will give the HOA or manager plenty of time to evaluate vendors and see what other options might be available.

3. Forgetting to check governing documents

Sometimes a manager or association can inadvertently get stuck – even if they research and bid on every contract. It’s not uncommon for community governing documents to place guidelines around contracts, such as prohibiting any that last longer than a year.

It’s a good idea to be familiar with the bylaws and to double-check the rules before signing on with any vendor. This can help associations avoid future headaches caused by running afoul of community restrictions.

4. Not informing homeowners of vendor changes

Whether management thinks its homeowners are interested or not, it’s always a best practice to be open and transparent with residents when there is a new vendor around. Especially in the case of a contract for recurring work, residents have a right to know how the community’s needs are being managed.

The HOA should keep homeowners in the know when it starts using new vendors. It brings a sense of integrity to the work as a manager or association, and it engenders trust between them and their residents. Plus, it gives them a sense of satisfaction to see that their community is being actively and intentionally managed.

Vendor contracts should be taken seriously

Vetting and approving vendor bids is undeniably more work than simply calling up a random service provider. However, it is worth the extra time and trouble. Managers and associations should be mindful of the top four mistakes to avoid in vendor bidding – poor research, skipping bids, ignoring bylaws, and keeping residents in the dark. Avoid these common issues and your community management will go much smoother, with a minimum of resident complaints, costly errors and legal troubles.VendorSmart is a comprehensive web-based marketplace that connects vendors and community managers in one place. At VendorSmart, we understand that third-party vendor relationships are critical to the success of any association or condo. Our software and team of industry professionals guarantee full compliance vetting for every vendor employed by your management company at no cost to you or the vendor. Want to learn more? Schedule a demo today.