Wanted: A managing agent who can provide skilled, professional services; knowledgeable, responsive, and willing to take initiative. Must be familiar with co-ops, compliant with regulations, and oriented toward client services. Requires strong communication skills (oral and written), employee supervision, shareholder relations, project management; multi-task with follow-up (start to finish).
Nice ad, right? Reality check: in my 20-plus years of co-op experience, I can credibly state that no one managing agent (encountered to date) embodies all that you need in an agent. Different firms have varying strengths and weaknesses. Drawing the best from all would result in my idealized managing agent. Finding the right agent for your co-op is an arduous yet critically important task. Boards must do their homework and be well prepared for the selection process (questionnaire, interview, references, etc.) Even with the most diligent effort, there’s still no guarantee you’ll succeed.
For varying reasons, my co-op has undertaken this search several times over the last 15 years with increased confidence, experience, and knowledge. My personal insights, experience, and limited suggestions may be worthwhile to share to help you avoid some pitfalls we encountered.
Initially, a subcommittee screens managing agents, secures information packet (firm profile) and submits a questionnaire (more specific questions). Factor in content and timeliness of response within stated parameters, along with management experience, size/location, years in business, number of buildings/units per property manager, property locations, operations, fee-based services, other.
The subcommittee presents information for board review and selection of agents to then interview (invitation only). During one such in-person interview, an agent came before the board (uncharacteristically casual; empty-handed with no additional firm information or pad on which to jot notes) and in response to queries stated, half-in-jest: “She’s tough. She asks questions!”
Be wary of the many managing agents that interview and present themselves very well. Instead, try and look for tangible substance and talent (i.e., their history of accomplishments in successful property management. How did they save money for their co-ops? Avoid lawsuits? Contain arrearages? Problem-solve disputes?).
Assess the verbal communication skills of the actual property manager servicing your co-op. As shareholder-tenant relations are a critical part of the agent’s responsibility. At the interview, ask the property manager such questions as: “Describe your process and response to a shareholder issue such as a noise complaint.”
Clarity in communication is important. We found that out when a low-key property manager assigned by management to our co-op (no benefit of prior interview) responded “yes” to queries from residents he would meet occasionally in the building. Those affirmative responses gave each the impression that his or her issue was being addressed. In time, however, it was clear that most of those issues remained open, without any follow-up, status update or resolution. As it turned out, the affirmative answers were only meant to acknowledge the resident’s question had been understood, not that anything had been done.
Review prospective managing agent’s correspondence and management and inspection reports. Examine written communication for proper grammar, details, spelling, structure, content, and format, etc. This is very telling. With one manager we had, we endured amateurish notices riddled with misinformation and poor grammar. The annual shareholders’ meeting notice lacked full information; and required another release with updated information. Sloppy work leads to unnecessary problems.
Present one or two situations for managing agent’s “on the spot” candid response. This is helpful on multiple levels: problem comprehension, ability to respond quickly, honesty (he may say: “I don’t know but I will get back to you after research”).
Contact references for both current and former clients. Inquire about clients that have left the firm and why. Listen to all sides. There may be a reasonable explanation such as a new board chose to simply start fresh with a new agent. Or there may be management shortcomings cited (with examples) by such clients. Weigh the information to arrive at a balanced decision.
Inquire about lawsuits (past, present, pending). Don’t jump to possible wrong conclusions – check the facts upon which to then make an informed decision. Was there a frivolous claim that was eventually dismissed? Ask about violations on any of the properties they manage – what, how, why? Who was/is liable? Any regulatory compliance issues? Remember that careless mistakes can become costly mistakes. Does management conduct periodic searches for building violations?
Take my building. Although we filed Local Law 11 documents well in advance of the deadline, we later received violation notices that weren’t clearly identified. Management’s initial attempts to resolve proved unsuccessful as the underlying violation wasn’t clearly known. All building work was complete; performed in full compliance with requirements/regulations. Eventually, after much back and forth, the end result was to rectify an earlier filing by a previous engineer citing “unsafe building conditions.” We finally discovered that several units had once improperly installed air conditioners but they were now properly installed. However, it required a new engineer’s report and a new filing, which had not been done.
Avoid inexperienced management who may learn at your expense. We once had a property manager who took copious notes at board meetings but he never followed up. Turns out, he was hired as a property manager based on his high-end superintendent experience at another building. This placed a man woefully unqualified, lacking knowledge, and experience in charge of the daily operations of our co-op.
Successful property management is a team effort, a business partnership. This unique relationship is interdependent and reliant on shared knowledge, information, and experience.