Vendor Relations Negotiating with Service Providers

Vendor Relations

They are the ones who maintain elevators, lay traps for rodents, re-tar the roof, mow the lawn, and rewire the lights in the association clubhouse. If a water main bursts, they repair the leak. You can find them under the boilers, in the flowerbeds, and around the swimming pool. They are the vendors who provide services for your co-op or condominium.

Whether your homeowners association is self-managed or employs a management company, the board of directors will at some point have to make decisions about how and from whom the association gets its supplies and services. Indeed, building and maintaining efficacious relationships with vendors is essential to your association's financial and physical well-being.

The vendor process involves finding and vetting the vendors, deciding which ones to hire, negotiating for the best rates, and, most importantly, establishing and maintaining good working relationships. In a perfect world, all a board has to do is maintain its existing relationships. In case yours is not a perfect world, here's a look at the process, from soup to nuts.

Decisions, Decisions

Who determines which contractors should be used for which jobs? As with most major decisions, the choice of which vendor to hire is generally a joint effort between the board and the managing agent.

"Vendor choices are generally made by the board in conjunction with the managing agent," says Robin Habacht of Monticello Management, which has offices in Leonia and Matawan. "The agent will, at the request of the board, refer vendors for interviews."

Managing agents tend to have more experience with vendors than do board members, so their recommendations should not be taken lightly.

"I would never call someone out of the blue who I didn't know," says Larry Silverman, owner and president of Atlantic Management in Union City. "Everyone on our list is either someone we know directly, or through other people."

Most managing agents have been in the business for long enough to have compiled an overstuffed Rolodex of potential vendors or contractors for just about any need. In Silverman's case, he keeps two or three plumbers, electricians, roofers, and so forth on hand—a list he's whittled down through the years.

"We had to go through ten people to get those three," he says.

Habacht agrees. "Agents like to make recommendations based on prior actual experiences dealing with vendors," she says.

"Reference checking processes vary from HOA to HOA," she adds. "Some associations have committees who will check references, while most prefer to have the agent perform the reference check as part of the management function."

"HOAs have access to service provider information from a variety of public and private sources," says Habacht, "such as The Cooperator, CAI, the Internet and [contacts] within their community."

Often, homeowners associations already have longstanding relationships with really good vendors—relationships that need only be maintained. And managing agents are not above taking recommendations from boards.

"It's a hybrid," says Silverman of the vetting process. "If the board has people they like, we use them."

Time is Money —But More Valuable

There is no free lunch, and you get what you pay for—both are true enough. But there are ways to trim costs when dealing with vendors.

"Board have several options when it comes to negotiating a reduction in lower vendor costs," says Habacht. "Some options include negotiating longer contracts, re-evaluating contracts to ensure all contracted items are necessary, combining services such as landscaping and snow-removal contracts, and negotiating an up-front discount for pre-payment of contracts."

A good time to potentially save money is to when contracts with service provider are about to expire.

"We recommend that associations always remain open to meeting new vendors and remain current with what the market is offering in terms of services," Habacht says. "Remaining aware of current market trends does not necessarily mean there is a need to change vendors; rather, it may stand to assure an association that the current services from their vendors are appropriate, timely and priced properly."

Another way is to tell them exactly what you want, which can be easier said than done.

"Every homeowners association is different," says Dave McKiernan, the Bound Brook branch manager of The Brickman Group, a nationwide landscape contracting company with seven offices in New Jersey. "And some work requests can be very gray, very generic. It's best to have a detailed set of specs for how you want the work to be done."

This saves money by saving time.

While it is possible, and certainly advisable, to negotiate deals with certain vendors, time, in most cases, is more valuable than money.

"We're more interested in service than rates," Silverman says. "I'm more interested in a plumber who will stay a little later to take our job than in saving a few dollars."

He has found that it's best to be up-front with vendors, rather than trying to nickel-and-dime them. For one thing, the latter is not a good way to build a trusting relationship. For another—and more pragmatically—vendors can combat nickel-and-diming by simply asking for more to begin with.

"I tell them to give me a good rate," Silverman says. "They know they're bidding against other people. If it's too much, they won't get the job."

"If you treat them well, they'll give you a good rate," he continues. "And they'll be sure your job gets done."

Be People People

By putting a higher premium on service than on money, Silverman is using basic psychology—who would you do a better job for, a nice guy who treats you with respect, or a cheapskate who regards you as disposable?

There are two keys to building lasting relationships with vendors. One of them Aretha Franklin sang a song about.

"If you have a good vendor, respect that person," Silverman says. "Work with them, treat them as a professional. Treat them as if they're wearing a suit, even if they're crawling under a boiler or working on a roof. Trust their opinion."

A lot of people are naturally suspicious, afraid of getting taken to the proverbial cleaners by opportunistic plumbers, electricians, and so forth. This instinct can sometimes get in the way.

"There should always be a healthy skepticism," Silverman says. "But these are the better vendors, who provide you an important service, and they should be respected."

Communication is the second component.

"The better property managers are the better communicators," says McKiernan. "They are the go-between. And it's all about communication. "This goes beyond open dialogue between the board and the vendors, McKiernan notes; for the relationship to work best, the board must also keep the homeowners in the loop.

"Let's say Mrs. Smith on 10 Oak Tree Lane calls in," he says, "and requests that her rhododendrons get cut below the line of her window. The communication needs to work both ways. The contractors need to say when they'll get the job done, and the manager needs to tell the tenants what to expect."

Too often, Mrs. Smith will not be told that the landscapers won't trim the bushes until next Tuesday. That's the day when they do routine jobs around the association grounds, but unless she knows that, Mrs. Smith might get annoyed at the board, the manager, and the vendor at what she perceives as an unnecessary delay.

McKiernan suggests that communication should be in writing, rather than verbal. "It's better to have every work order documented," he says.

There are times, unfortunately, when respect and communication are not enough.

"A lot of vendors are just not that good," Silverman says—they're late, unreliable, or just plain incompetent. "It's something you have to constantly monitor."

Building solid relationships takes trust, time, communication, mutual respect, and luck. Those elements that can be controlled—everything but luck—should be developed to get the most out of your relationships with vendors.

Greg Olear is a freelance writer and a frequent contributor to The New Jersey Cooperator.

Related Articles

Money finance growth chart stock market, dollar moving up

Inflation, the Supply Chain, & Your Monthly Charges

Co-ops & Condos Feel the Pinch

International airport terminal. Asian beautiful woman with luggage and walking in airport

When Residents Are Away

Managing the Challenges of Empty Units

Human hand hold banner, placard with word Yes, No. Test question, choice, dispute, vote concept

The Board Approval Process

Staying On the Right Side of the Law