Negotiating contracts is a challenging task. Remember not to let your emotions take over, keep your client’s interests in mind, and know when to walk away.
Contract negotiation is an art — or at least it should be. No matter the industry, contracts can take months to get just right, to the point that all parties are satisfied. Lots of compromise needs to be made, and everyone involved must show be patient and level-headed.
As a management company, if you’ve been tasked with handling contract negotiations for the association board, it’s your job first and foremost to fight for the HOA or condo association’s best interests. It’s up to you to maintain a professional attitude and know when it’s just not going to happen.
Keep these negotiating tips in mind the next time you’re working on contract negotiations with a vendor or supplier.
Approach discussions with an open mind
It’s easy to look at a new contract with your defenses already up. You may see a few terms or clauses that you just can’t agree to off the bat, and this can easily start negotiations off on the wrong foot.
Even if you’re not OK with everything, remain calm. You have no idea whether or not the vendor will be difficult about any changes, so approach discussions as if it’s no big deal. Be kind but firm in your emails and phone calls. Explain your position, and remain open to whatever the other party has to say.
It’s not going to get you anywhere to start talks with fists up. Give the other party the benefit of the doubt until they prove otherwise.
Be detailed and specific
Make sure you mark up the contract with specific wording or prepare a list of items to discuss. Going into a negotiation without this information can be confusing, and if you don’t have clear expectations or wording, it could look like you’re either not prepared or not that serious about the changes you want to make.
Being specific and ultra-prepared will benefit both you and the person on the other side of the table. There won’t be any gray areas, and you will be setting them up to make a counter suggestion for a compromise.
It’s important they know exactly where you’re coming from.
Keep the participants to a minimum
Contract negotiations that include more than two or three people can become messy and complicated. There should be one point person heading up negotiations on each side. If others need to be brought in to better explain policies or must-have terms, try to keep them to a minimum. Often, you’ll need to bring in a board member, or a board member may be the association’s point person depending on your responsibilities outlined in your own contract.
If too many people are involved in negotiations, it may confuse the vendor about the association’s contracting process.
Make sure all must-have protections are in place
There are certain terms that must in any association’s contracts. These include items like standard insurance requirements and indemnification, in addition to a termination provision.
It’s not enough to ask vendors if they have standard insurance protections, like liability and workers’ compensation. These protections must be outlined in the contract, and the vendor must have proof.
An indemnification clause is necessary so the association isn’t liable for mistakes the vendor or supplier makes or negligence on their part.
Without a termination clause — or a “phased contract” in which the work can be assessed or evaluated incrementally — there could be no way out if the association is unhappy with the work or services provided by the vendor.
Make sure you know your role
More often than not, the association board will have final say over contract approval. As already touched upon, this process will depend on your own unique relationship and contract with the association. Sometimes contract negotiation and handling will be a management company’s responsibility or partial responsibility, and sometimes not.
Make sure you read over your contract thoroughly, so you know the association’s contract approval process. Work closely with the board or a designated board member throughout the negotiations. Another point to remember here is that the board is usually responsible for the final decision on hiring and firing vendors.
While you may think you know what’s best for the association, you may not get the final say.
Know when to walk away
Unfortunately, some contract negotiations don’t end in compromise. If, for example, a vendor or supplier just won’t agree to include the necessary language mentioned above, it’s probably not going to work out.
Some terms are non-negotiable, so don’t be afraid to end negotiations and look elsewhere for a vendor or supplier who is willing to work with you on the important issues. Communicate the problems to the board and make sure they’re always in the loop about what’s going on with negotiations.
Negotiating contracts can be challenging for all parties involved. However, if you approach the discussion with an open yet firm mind and make the client’s best interests your priority, you’ll be able to start a strong, ongoing relationship with the vendor or supplier.
Management companies wear many hats, from administrative duties and maintenance to contract negotiations. You need a tool that will help you better connect to vendors and suppliers, and manage these important relationships in one place. VendorSmart provides this solution with a web-based marketplace where you can view already vetted vendors and manage documents. Contact VendorSmart to learn more.