When it comes to selecting a management company for your HOA, one of the most important factors you’ll consider is the cost. Ideally, you want to select a company that will provide excellent service at the fairest price. But, what happens when you hire a management company and find that it is ultimately more costly than you were quoted?
Feel Comfortable Setting Up Auto Pay
We all know what it is like to sign up for a service, like cable or a cell phone, and then be shocked when the first bill comes in the mail. When you signed up for the service, you agreed to a certain amount per month, but once you receive the bill, you see a long list of mysterious surcharges.
This shouldn’t be your experience when you receive your bill from your HOA management company, but it does happen. From deceptive pricing structures to hidden fees, you could find yourself in a situation where you aren’t able to reliably predict what your monthly bill will include.
To avoid running into this issue, you’ll need to carefully review the contract with your HOA management company before signing on the dotted line and keep an eye out for any potential red flags.
Additionally, is the quote you received from a management company remarkably lower than all of the other companies in the area? If so, it may be a sign of hidden fees that could be tacked onto your monthly cost. When reviewing, keep an eye out for any charges that could cause spikes in your monthly bill, like items that are charged per event.
It’s also a best practice to compare prices for the different management companies in your area. Getting multiple quotes from several companies can help give you an idea of what the pricing should be per month for your community as well as an opportunity to view different pricing structures.
When reviewing quotes, keep an eye out for any special verbiage that points out items that the company doesn’t charge for and use that to your advantage. If Company A says that they don’t charge per event, then when reviewing Company B’s pricing, see if they do charge per event. Listing these items as you see them can help you keep track of what to look for as you review each contract.
Look Past the Monthly Bill
While the cost of a management company is vitally important, so is the way they handle your finances after you’ve entered into a working relationship with them. So, what happens if you find the best priced management company in your area, but find that low cost comes at a bigger price?
When it comes to an HOA’s finances, here are some of the other issues that you could potentially see:
Your community manager does a poor job of managing the association’s funds.
A community manager’s primary responsibility is to help ensure the successful running of your association. With that role comes a lot of trust, especially since they will be making decisions and taking actions that financially impact your community.
Without proper training, accountability, or processes in place, you may run into some issues with the way your community manager is handling your finances. From overspending to making purchases without the board’s knowledge or consent, it’s important that you know how much your community manager is spending on your behalf.
To avoid running into this issue, it’s good to set boundaries from day one regarding finances. Set limits to how much your community manager can spend without board approval and establish how you want financial decisions to be communicated.
Also, don’t forget to ask for receipts! With weekly or monthly reports from your community manager, you can easily track spending to ensure that it’s aligned with your expectations.
Your management company’s accounting department doesn’t perform up to standards.
Since the accounting department works behind the scenes on behalf of your HOA, they may not immediately come to mind when considering signing with a new management company. But, that doesn’t mean that the work that they do for your community is any less important.
When it comes to accounting, you want a team that is both highly skilled and has been given thorough training on HOA specific accounting. You also want open communication and reports that are both timely and accurate.
Before signing with a management company, be sure to ask about the accounting department and their process. What kind of HOA specific training have they received? How frequently can you expect financial reports? What processes are in place if you receive an inaccurate report or find that reports are frequently delayed?
By asking these questions, you can gauge how experienced their team is and what safeguards are in place should you experience any errors or delayed responses. Since the accounting department handles the money that you and your fellow homeowners pool together to make your community a wonderful place to live, you want that reassurance that it’s being handled by skilled, expert hands.
Should you have any further questions regarding HOA finances, you’re in the right place! You can access our knowledge base, which has instant answers to our most frequently asked questions. Contact Spectrum Association Management today to receive a free HOA management quote for your homeowners association.