A manager should not be a juggler balancing plates at the tips of long poles, trying to keep the “plates” – i.e., his or her properties – from falling and breaking. How, then, would you define the role of the managing agent at condominiums, cooperatives, and homeowner associations? It is not a simple question, but we can find an answer by looking at a number of factors that will tell you how a manager should be running a property. What are reasonable expectations? In short, what does a manager do?
Site visits. First, you should expect your manager to visit your property fairly regularly. Managing agents cannot manage properties from their desks. They have to be out in the field at least 50 percent of the time, visiting the properties they manage at least once every week.
Response time. In most instances, owners should receive an immediate response to their inquiries. They should also have the direct telephone extension for their managing agent, administrative assistant, and accounts receivable customer service representative. If the person they speak to does not know the answer, it is researched and the call should be returned within 24 hours.
An inquiry submitted in writing receives a written response. Timely communication is very important to owners. Owners want to know the status of their requests. Copies of written inquiries and responses appear in the monthly management report.
If owners’ requests require a board decision, owners should be notified when the board will review their requests and when they will receive a response. Good communication helps owners feel at ease that their requests will be considered and they will receive a response within a reasonable time period.
When an agent is in the field, the board should still be able to communicate with him or her or get an answer from trained administrative assistants, accounts receivable, and customer service representatives. Most of the time, experienced support staff will be able to respond to inquiries to the owners’ satisfaction. When managing agents return to the office, they are informed about what transpired. But in this age of smart phones, managers are always connected. If a manager does not have the proper back office and technical support, some “plates” will drop and break.
For emergencies at night, on weekends, or holidays when the management office is closed, owners should be provided with a dedicated telephone number to reach an operator. The operator should be able to contact the person designated as first responder to an emergency. If that person is unavailable, the next person in line will be called, followed by the next and the next, right up to management company executives. In many cases, too, board members are often provided with the manager’s cell phone number and e-mail address.
Workload. The number of properties assigned to the manager can tell you a lot about the sort of response you should get. But a simple number does not tell the whole story. The answer of six, eight, or ten properties can be misleading. In one management company, eight properties with adequate administrative support for the manager can be like managing four properties, compared to another company where six properties without adequate support can be like managing twelve properties.
Training and education. There are no management licensing requirements per se (the sole regulation is that the firm or managers be operating under a broker’s license). But managers can have various training certifications, with continuing education a requirement. Certainly, having a certification is a plus because it says that the manager or his firm took the job seriously enough to pay for a training program.
But knowledge combined with experience is the best teacher. The management team, led by supervisory staff of veteran managers, should be overseeing the work of the managing agents, administrative assistants, staff accountants, accounts receivable customer service representatives, and accounts payable department.
Weekly or bi-weekly staff meetings nurture the professional development of managing agents. At staff meetings, every property in the management portfolio is reviewed with supervisory staff and fellow managers, encompassing years of combined experience, sharing their wealth of knowledge. Staff meetings improve the quality of service to all managed properties.
In the ideal world, a managing agent should have a minimum of five years’ experience specifically managing cooperatives, condominiums, and homeowner associations with professional supervision throughout, but that is not always the case.
Extra fees. One concern of new boards is extra fees. Every management company has schedules of additional fees: some paid by the individual owners (transfer department/sales, refinance sublet), others by the co-op or condo (issuing annual window guard forms, and 1098s, for example). A lot of the fees cover costs that are not encountered by every property, so they are not included in the base fee.
Bidding. It is the function of the managing agent to determine, through competitive bids, if the board is getting the best quality for the prices it is paying. When a board is dissatisfied with some of its vendors and contractors, it is the job of the managing agent to secure competitive bids to replace them. It is not necessary to competitively bid every service (exceptions are emergencies and when there are price cutoffs, i.e., bidding only starting on jobs costing more than a predetermined amount).
All management companies have contractors with whom they have had experience. If contractors provide quality work at a fair price, they will earn a place on an approved list to call for proposals. There is never a requirement to use a contractor recommended by the managing agent. The agent is available to provide professional help any time the board decides to check prices or make changes.
Back office. A visit to the management office is the best way to learn about the organization supporting the manager. Anyone can declare, “I am a managing agent.” Boards hire managing agents without proper qualifications at discount prices with the notion that they are “saving money.” It is remarkable that millions of dollars of assets are entrusted into the hands of amateurs who have limited or no experience with finances or property management; mistakes are made at the expense of the owners they are hired to serve. When owners do not get the services they need, money is not saved and resources are wasted.
Maintaining accurate records is crucial to the life of a property. Financial and maintenance records are as important to a property as medical records are to an individual. Quality record-keeping includes the following: accounts payable files are segregated by properties and vendors. Accounts receivable are updated daily via a wide area network directly connected to the banks’ computers. Precise cash balances are available at all times. Owners’ unit files contain every transaction with residents.
A professional management company has a purchasing department to competitively bid goods and services. Orders are placed with approved and signed purchase requisitions. Invoices are matched to signed delivery receipts and copies of purchase requisitions. Invoices are reviewed to confirm that quoted prices on purchase requisitions and quantities on signed delivery receipts match. An insurance compliance department has verified that contractors’ insurance coverage’s are in effect and meet requirements to protect the board and owners from personal liability. A check is issued for payment only when all internal controls have been confirmed.
Professional management services include a paralegal/closing coordinator to monitor legal activity. The closing coordinator also manages sales and sublets. A legal status report provided by the properties’ attorneys appears in the monthly management report.?All property management activities culminate in the preparation of a monthly management report. The managing agent can guide a board through the report by presenting the financial report, legal status report, review of correspondence, and contractors’ proposals for work to be performed at the property. Boards are well-informed and can fulfill their true function as a decision-making body.
In the end, the board that takes the time to learn about the role of the managing agent and their property will have made a worthwhile investment. All too often, the “board of directors” becomes the “board of workers” because the management company it hired is not able to meet its needs.