Self managed or not, who decides?

I live in a community of 88 privately owned houses (not condos). Currently we have a horrible property manager that has royally screwed things up. However, thankfully a new board was elected, things are much better and she is on her way out. The board is deciding between going self managed or hiring a new property manager.

Should the board make the decision to go self managed or should that be a decision made by the community?

Since it is a large decision, I can see how the community should have a say in it, but since it’s the board that takes on the extra work I can see how it should be their decision as well?

Daryl,

Frankly, I don't see this as being an issue that the membership should vote on. Perhaps a poll, as John's board did is in order, but nothing more I would say. Afterall, it's the board members who will be most affected by the decision. Actually the membership should be happy as the assn will be saving a bundle in mgmt fees!

For what it's worth, based on our experience, make sure those BODers who want to try S&M consider:

1. Switching over takes a good bit of time, esp. in the beginning.
2. S&M, regardless how (hopefully) good a Membership you have, requires enforcing dues collections, fines, and perhaps mediating/deciding disputes between or among Members.
3. Things never anticipated are bound to happen.
4. The BOD could become the "Them" vs. "Us" when it comes to making hard calls. Establishing rules at the outset, and making sure Membership knows and understands the rules, is important.

One of the best posts I've seen here over the years on self management vs. a Management Company came from a fellow who only posted a few times. Below is a re-post along with a link to the original:

http://www.hoatalk.com/Forum/tabid/55/view/topic/forumid/1/postid/329/Default.aspx

RobertL3

Self management can be a costly mistake for homeowner Associations. Volunteers often lack the experience to effectively take on the duties of Association management; collecting dues, paying bills, handling maintenance, record keeping, and rules enforcement.

A much more beneficial and sustainable situation is one in which service to the community does not diminish the volunteer's ability to enjoy living in their community. The best way to take pressure off your volunteer Board is to hire a professional to manage the day-to-day affairs of the association. Start by considering the four reasons why you might want to hire a manager:

Reason 1: Time

It takes time for volunteer board members to run their association. On any given day these volunteers might be responding to homeowner calls, arranging maintenance appointments for various everyday repairs, writing enforcement letters, dealing with the grounds contractor, posting assessment payments and preparing financial statements, and consulting with the association attorney on collections and other legal matters. If this sounds like a full time job, you might want to let your homeowners be homeowners and hire an experienced agent to perform these duties.

Reason 2: Knowledge

In addition to technical specifications and various questions of law, finance, and governance, you need to have more than a passing familiarity with local, state, and federal laws that apply to everyday workings of your community. Yours would not be the first board to feel overwhelmed by the sheer volume of knowledge it must possess. Good professional managers bring a wealth of knowledge and experience to the table, making them a valuable resource for the board.

Reason 3: Continuity

Board members might come and go, but a manager can offer a common thread that links one administration to the next. Why does this matter? Think about the importance of continuity when it comes to record keeping, budgeting, dealings with contractors, suppliers, and professional service providers, and even the relationships with your residents.

Reason 4: Convenience

The board should be a decision-making body, but too often the day-to-day distractions of educating residents and attempting to meet their expectations can pull managing board members away from the big picture. Professional management can provide an administrative buffer, giving your residents the attention they deserve and freeing the board to focus on those decisions that affect the long-term viability of the community.

Professional property managers bring a wealth of experience and knowledge to the table that can end up saving homeowners thousands in unplanned expenses and lost property value at a cost to each homeowner of just pennies a day. (If it sounds like a plug, it is. Full disclosure requires that I admit to being a professional property manager who once took my own community down the self-managed route. ;)

Experience with insurance, contractors, maintenance, enforcement, and legal issues can save an inexperienced volunteer hundreds of hours of research. Professional property managers can keep issues of assessment billing and rules enforcement from becoming “personal”. Finally, a well run, professionally managed Association can retain its attractiveness to potential buyers, resulting in higher property values.

While it is true that homeowner volunteers can perform some of the functions of a professional property manager, it is also true that volunteers often lack the experience to effectively take on the duties of Association management; collecting dues, paying bills, handling maintenance, record keeping, and rules enforcement. A professional manager can help your Association avoid costly mistakes.

There is also the issue of fairness and risk. Association management is a mandated function under most Association CC&Rs. Asking a single member to provided mandated services free of charge places an unequal burden and costs on that member (fairness) while the costs of errors and omissions on the part of that volunteer are borne by all (risk).

When you consider the potential costs to the Association of poor or inconsistent management, financial mismanagement, poor record keeping, inadequate reserves or insurance, inadequate maintenance, volunteer burnout, inconsistent rules enforcement, and falling property values then the advantages and true value of professional management become more and more apparent.

This is not to say that self-management does not work. I headed up a Board that successfully managed a single family association. But it was a LOT OF WORK to do the job right. There are thousands of associations across the country that successfully self manage. The question any Board needs to ask itself is, are the costs worth the benefits? If the answer is yes, then by all means, go for it. In many smaller and single family associations without many amenities, self management is the only thing that makes sense. Understanding the pitfalls will hopefully allow you to make the best decision for your community.