HOA Searches for New Manager

: Richard Montgomery on Oct 1, 2024

Dear Monty: I am the president of our homeowners association. We hired an outside company to act as a liaison between our board of directors and the general membership population. We don't want to argue with our neighbors or enforce the rules when a member violates the rules. Our current outside company is local. What options do we have if we want to change managers, and do they have to be local?

Monty's Answer: If you're considering changing managers or comparing pricing, it's important to understand your options and the potential implications of such a decision. First, consider reviewing your current contract with the management company to understand any termination clauses, notice periods or potential penalties for early termination. This will guide your timeline (and process, if you make a change). It is common to review pricing and share any issues with them.

Regarding whether the management company needs to be local, there's no inherent requirement for this. In fact, many HOAs work successfully with non-local management companies. However, there are pros and cons to consider:

Local management companies often have advantages such as:

1. Familiarity with local laws, regulations and market conditions

2. Ability to physically inspect properties and attend meetings in person

3. Established relationships with local vendors and service providers

4. Better understanding of community culture and concerns

Non-local management companies may offer benefits like:

1. Potentially lower costs due to economies of scale

2. Access to more advanced technology and management systems

3. Greater pool of expertise and resources

4. Objectivity and distance from local politics or personal relationships

When considering a change, you have several options:

1. Switch to another local management company: This maintains the benefits of local presence while potentially addressing any issues with your current provider.

2. Hire a non-local management company: This could provide fresh perspectives and potentially more advanced services but may sacrifice some local knowledge and presence.

3. Bring management in-house: This gives you more direct control but increases workload for board members and may reintroduce the interpersonal challenges you sought to avoid.

4. Hybrid approach: Combine a non-local management company for administrative tasks with a local property manager for on-site needs.

Before deciding, consider conducting a needs assessment for your HOA. What specific services are most important? Are there particular pain points with the current arrangement? This will help you evaluate potential new managers more effectively.

Also, consider soliciting feedback from your membership. Understanding the community's perspective can guide your choice and help ensure a smooth transition. Your members may also have friends in other HOAs. Ask your members to learn if their friends are happy with the HOA and the management company.

When evaluating new management options, key factors to consider include:

1. Experience with similar communities

2. Range of services offered

3. Communication style and responsiveness

4. Technology and reporting capabilities

5. Fees and contract terms

6. References and reputation

You might find that a regional company with a mix of local presence and broader resources is the ideal fit. Or you might discover that your current provider can address your concerns with some adjustments to your service agreement.

Richard Montgomery is a syndicated columnist, published author, retired real estate executive, serial entrepreneur and the founder of DearMonty.com and PropBox, Inc. He provides consumers with options to real estate issues. Follow him on Twitter (X) @dearmonty or DearMonty.com.

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