Community associations (or homeowners associations) exist to manage and maintain the neighborhood. They operate solely with the community’s best interests in mind. However, more often than not, HOA boards consist of unpaid volunteers, and they can only do so much for the entire community. As a result, most community associations seek outside help. There are a variety of factors you must consider before you select a community association management company.
Here, we discuss what to keep in mind when choosing the right community association management company for your HOA. We also delve into the importance of these companies, be it to the HOA board or a regular member of the community.
How to Select a Community Association Management Company
One of the many responsibilities of a community association to govern. They create the CC&Rs and implement the rules been decided upon by the governing body. They determine the penalties for non-compliance and, most importantly, make decisions regarding certain matters that affect the community. All these tasks can seem challenging without a helping hand.
To help you out, here are tips on how to select a community association management company:
1. Consider the Community Size and Its Complexity
The HOA board must first go through a number of items that must be considered before you select a community association management company. It is crucial to consider certain factors and resources to ensure that the firm you hire will be effective at its job.
With that in mind, begin by considering the community size, as well as its complexity. This is important because it will also determine the necessary services to be performed by the firm. The larger the association, the more diverse and complex it will be. Thus, the more sophisticated the HOA management company should be.
Choose an association management company that can handle your size. If an HOA management company has only ever dealt with small communities, they may not be the right fit for a large one such as yours. Ask them for references, if possible.
2. Consider the Community’s Financial Resources
Another important factor that will greatly affect your decision is your community’s available financial resources. If the budget allocated for an HOA management company is small, you should reconsider choosing big-name companies.
A common misconception about affordable community association management companies is that they offer lower quality services. However, there is no truth to this claim whatsoever. Affordable HOA management companies can be just as competent as more expensive ones.
On the other hand, if you require larger-scale services and can afford it, go for a company with a solid reputation in the industry.
3. Check the Availability of Volunteers
The number of volunteers within your community who are willing to fulfill the functions of the HOA board can also affect the need to hire a community association management company.
However, even though there is a high number of volunteers within the community, there is still a chance that you may need to hire a firm.
4. Figure out the Services of the Firm
There are a number of community association management companies in today’s market. Narrowing down your search entails screening those that provide services that will help you meet the goals and objectives of your community. Each company has its own set of services. With that in mind, it is important to discuss with the board what the community needs and proceed from there.
Nevertheless, some of the most common services provided by an HOA firm include administrative services, financial services, customer care services, and communication and maintenance.
5. Discuss the Contract Flexibility
Some of the questions that heavily deal with this category include the possibility of being tied into an agreement that will not allow certain changes. It is important that the community association board discuss these possibilities as well as the restrictions that may be involved with a particular firm.
Other questions that may be involved are those that have the potential to lower the cost. This includes an initial discount offering. If your community lacks financial resources, this may be a good start.
6. Consider the Values and Beliefs of the HOA Management Company
It is imperative to consider the values and beliefs of the community association management company. In fact, it’s important that it adheres to what your community believes in as well. Since the firm will be heavily involved with decision-making processes, they must see eye-to-eye with the members of the community. A conflict in values or beliefs may complicate things down the line.
Problems to Avoid with the Right HOA Management Company
If you are already part of a community association, this may confuse you. Why is there a need to hire a community association management company? It is true that the HOA oversees the maintenance of the common areas within the community. However, there is a good chance you will need help in other aspects of the job. This includes the decision-making processes, the implementation of certain rules, the hiring of third-party vendors, and the adoption of policies within the community.
You and the members of your community’s HOA may already be doing a good job. However, there are certain cases that will force you to select a community association management company. Here are some of the risks that may come up when having self-managed HOAs:
1. Consistent Lack of Volunteers
One of the top reasons as to why an HOA may want to hire a community association management company is that there is no one willing to step up to perform the said responsibilities. Do note that being part of the HOA board does not guarantee you any financial return. This is an unpaid position. As a result, even the most dedicated neighbors will find themselves paying more attention to things that will earn them a living.
2. Lack of Consistent Governing Strategies
Another risk with having to manage your own community’s HOA is the lack of consistency in governing. Whenever particular volunteers are behind the laws, there are times when convenience will reign supreme. As a result, the risk of having favoritism, politics, power play, and unfair treatment are not far behind.
3. Non-compliant Accounting Standards
It goes without saying that keeping accurate books is integral to a community association’s success. Failure to record every financial transaction makes your association vulnerable to thievery and other unsavory outcomes.
HOAs also rely greatly on financial reports to understand their current financial condition. Through these reports, board members can see where most of their spending went and how to allocate budgets for the succeeding year.
Accounting has always been a common weakness among HOA board volunteers. It is a task that requires some level of skill, not all board members are equipped with. However, you can easily take care of this issue when you select an HOA management company that also offers financial services.
4. The Possibility of Increased Lawsuits
Stemming from the previous point, these unlawful acts will not go unnoticed. When there is a clear form of discontent from the community, an increasing number of lawsuits are possible. Properly managing the community entails professionalism. Without proper management, it is actually not uncommon for an HOA to file a complaint with the local, federal, and state laws.
Choose an HOA Management Company Today
As you can see, when you don’t select a community association management company, you open yourself up to a range of risks. In the end, going through a long list of HOA firms is necessary. To effectively narrow down your search to the best candidate, you must consider all of the factors that may affect the members of your community. You can save a lot of time and save yourself from confusion by following these proven tips.
Of course, if you want to skip the hassle, we can lend you a hand. Don’t hesitate to give us a call.