Selecting HOA vendors is not as easy as it seems. It involves a lot of moving parts and your HOA board must weigh out all your options before coming to a decision. Thankfully, there are some tips you can follow to make the process easier and effective.
Selecting HOA Vendors: Advice to Help Your Association
One great challenge for associations is how to choose HOA vendors to complete the required tasks of their communities. If HOAs are not careful, they will end up spending unnecessary amounts of their allotted budgets on expenses that they could have found less expensive elsewhere.
For HOAs that are looking to utilize their resources in the most effective way possible, it is wise to carefully review contracts with any existing vendors and negotiate contracts with new vendors with care. Here are some tips on selecting HOA vendors to help you out:
1. Review the Governing Documents of Your HOA Carefully
Before learning how to select an HOA vendor, your HOA board must first have an adequate understanding of what its rights are. The reason for this is that certain HOA agreements have stipulations about which vendors you can hire.
By knowing your HOA governing documents, you can make an informed decision about what kinds of vendors you are looking for.
If your HOA board is unsure, make sure to seek outside advice to interpret the original intent of the governing documents of your association. By doing so, you will have a clear understanding of what vendors you need and can hire within the stipulations set out in the governing documents.
2. Understand the Difference Between an Employee and an Independent Contractor
There are many important differences between an employee and an independent contractor that your HOA board must know. Hiring an employee has several extensive obligations that will cost your HOA a great deal of capital.
For smaller assignments that do not require a vendor, it is cheaper to hire an independent contractor than a full-time employee. Employees are more expensive because, in many circumstances, you need to pay for benefits.
When selecting HOA vendors, your HOA board must get together and consider your options carefully. It is also a good idea to ask your HOA manager for advice if you find yourself in a pinch.
3. Have a Concrete Budget in Place
When you serve on the board of an HOA, you have a fiduciary duty to represent the best interests of your community.
Your fiduciary duty means that you will have the responsibility of managing the finances of the HOA with integrity.
Your HOA board must have a concrete budget in place to allocate the necessary expenses to carry out the fiduciary duty of your HOA with ease.
Within your concrete budget, you must allocate certain funds to ensure that tasks are completed. Allot certain parts of your HOA budget to cover the required expenses. Furthermore, make sure that you are only considering vendors that fall into the ideal price point that matches the budget of your HOA.
4. Interview and Quotes from Many Different Vendors
When learning how to hire HOA vendors, it is never wise to only get prices from one vendor. It is beneficial to get prices from at least three different vendors to get an idea of what the competitive price is in the market.
If you do not speak with multiple vendors, you might miss an opportunity to save a great deal of capital. Get a vendor that has a balance of high quality and ideal pricing. Not wasting capital is an excellent way to build further trust with your community’s residents.
5. Verify the Vendor’s References
Whenever you hire a new vendor, it is best to speak with at least two of their former clients. You should assess whether they have experience managing a community of your size and examine the quality of their services.
If any company fails to provide you with this information, consider it a red flag. A vendor with excellent references is likelier to do an excellent job and enhance the quality of life in your community.
6. Check on the Vendor’s Insurance, Licenses, and Credentials
Depending on the services you require, it is wise to verify that the vendor you are considering has the proper credentials, licenses, and insurance. Avoid any vendor/s that will not present this information to you in an industry that requires it.
The ideal vendor will have no issues with transparency. Once you find a vendor that readily presents this information to you, your HOA should consider working with them if their pricing matches your HOA budget.
7. Make Sure to Have Contracts in Place
Contracts are an excellent way to clarify what a vendor’s exact responsibilities and pricing are. It is unwise to hire a vendor without having contracts in place. HOAs that can lock vendors into a certain bracket of pricing can save a great deal of capital over an extended period.
Have your attorney examine the contract before signing, too. This way, you can cover all your bases and safeguard your association.
8. Balance the Price with the Quality of Service
When working with the budget of your HOA, you need to place a priority on certain services that your community needs. Some services may have higher values than other services.
It is important to discuss with your HOA board which services need to have additional capital allocated to them. By having these discussions, it will help to eliminate vendors that may be out of your price range.
9. Ask About Discounts and Bulk Pricing
HOA board members should never be afraid to ask for discounts from vendors. It is important to ask about bulk pricing, particularly if you have a larger community that will provide a vendor with continuous work.
If your HOA can negotiate bulk pricing with prospective vendors, it could provide substantial savings to your budget. This, in turn, will reduce the additional charges that your HOA will have to make to your residents. Residents, as a result, will have a higher level of confidence in the efficiency of how your HOA is using its allocated budget.
Choosing HOA Vendors Done Right
Selecting HOA vendors is not always a simple process. It requires a lot of time and work. But, when done properly, you can land a contract with a vendor that suits your budget without sacrificing quality. In the end, both the HOA board and the homeowners will benefit. So, the process may be long, but it is definitely worth all the hassle.
If your HOA still has trouble selecting vendors, consider hiring an HOA management company. In that case, reach out to us today. Call us at (855) 238-8488 or email us at help@emspm.com.
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