Management Companies and Estimated Costs

Our BOD is considering a Management Company because they feel that it will help defer the neighborhood problems to someone who is more effective at handling them. Does anyone know the costs as well as the pros and cons of a Management Company before we take a vote in the neighborhood? We have less than 100 homeowners with very little overhead. No pools, clubhouses or golf courses. Just common areas that need mowing and a few lights. Thanks for any insight.

There has been much discussion of this topic here. Currently, on page 2 of the forum, you will find a topic called, "Cost of management company service". Have a look there and also try a search on the forum for: management company cost

Roger is right an MC is not a subcontractor, it is an agent of the association and handles all issues that the board empowers it to handle. If it is a full management company it handles compliance, bookkeeping, liens, etc. The board at that point is an oversight group that is the liaison between the MC and the homeowners if need be. The Board still has authority over the MC, but the purpose of entering in a contract with them is to let the MC do the work.

Darlene,
We recently hired a management company and we only have 51 homes. We were told by management companies that they normally charge "per home", but that it doesn't apply below 100 to 150 homes depending on what amenities and etc are involved.
We have no amenities or assets, just 51 homes in a subdivision in the county. Although a few of us homeowners have tried to tell the others that a HOA is a serious business and requires knowledgeable management, we have been plagued with apathy, misinterpretations of the documents, know-nothing boards, poor financial tracking, and even worse record keeping. We were able to locate a company for $300 per month. It is a family owned business and so far we are happy with the results. They handle all the fees/financials, 6 board meetings a year, one annual meeting, and all the covenant enforcement. The management company has been able to open the eyes of many people and we are getting financial reports, architectural reviews, violations letters, typed meeting minutes, and collections on all the past due accounts.
Hopefully you can find someone you can afford. Shop around to find a company that will custom fit their services to your neighborhood.
Kevin in Florida

Melissa:

So my real estate agent is a sub-contractor to me? I hire them to help me look for houses and sign a contract and I can fire them? Or are they acting on my behalf as an agent in my best interest?

Since I am in the sports world how about a sports agent, they can be fired at any time, so is Barry Bonds' sports agent his subcontractor? I think he is more of a agent of Barry Bonds acting on his behalf.

That brings me to an HOA, the MC is an agent that acts on behalf of the HOA per contractual obligations. It is totally different than a sub-contractor.

A SUB-CONTRACTOR is usually a person or business that is hired by a contractor who was hired by the owner. For example, lets say I want to build my dream home of one million dollars, I am going to hire a general contractor to oversee the contruction of this for me. They are in turn going to hire SUB-CONTRACTORS to do work such as plumbing, electrical, etc.

An MC could hire a subcontractors per say to handle the books or manage records, but the MC is the HOA's agent acting on their behalf.

By the way, there is such a thing Called "Buyer's Agent" when it comes to hiring a Real Estate agent. And YES they ARE to work for you to find the best deal. They split the 6% commission WITH the other Realor. Sometimse they split it 50/50 or 60/40. It is legal in most states to have a Buyer's Agent to represemt you when purchasing real estate. Matter of fact, there is even a Real Estate company that use "Buyer's Agent" in their names. They are a very useful tool and I wouldn't buy any Real estate without them. They are just Real Estate agents who split the sales commission to work for you.

I still disagree with your terms of "sub-contractor" versus "Agent". IF they are paid by me, have terms in their contract, and can be fired for violating terms of a contract with me. Then I consider them a "Sub-contractor". It just may be a "politically correct" term to call them "Agents". That sounds better than calling them a "Sports Sub-contractor".

Plus if I get to call them a "Sub-contractor" I get to lien them if they don't follow through with what I paid them to do. I can hold their equipment or funds until the job is done. If I call them an "agent" I most likely have to go to Civil court and handle the case from there. Then I only get a "Judgement" and NOT guaranteed to be paid back in a timely matter. It can take years for a Judgement to be paid off. A lien, someone's going to pay if they want their equipment back or their license is suspended.

So I agree to disagree. I will say that this ONLY applies to true HOA's where the owner's own their own houses. Mc's do work differently for Condo's and Townhomes. Those ARE managed properties. Homeowner's associations are slightly different as they are allowed to manage themselves (Owners) if they want. A MC is NOT always mandatory to have. It's just a "convenience" like having someone do your laundry for you.

Thank You HOA TALK for this clarification.....LindaC

Hi Darlene:

It may be helpful to contact several management companies to see what levels of service they typically provide, and how much those would cost. Then, your board could sit down and decide what level of service they would like to pursue - for instance, just handle assessments, property transfers, banking? or have more of a day-to-day involvement, and at what level? Attend board meetings, or simply send a report the week before? Would you look for a management company with a maintenance dept. that would change lights, or have a handyman hired from time to time to do that? Write violation letters?

There are many things to consider, as far as the level of service you would like to pay for; also, there may be some minimum charges that the management companies have, and that may point you toward one as opposed to another.

It may be more worthwhile for the board to do homework to understand pricies and service levels, before taking the issue to a vote.

Your local or state CAI chapter may have a list of management companies who are members; that would be a great place to start looking.

J. Patrick Moore, CMCA