Due Diligence With Vendors Is Worth It – Here’s Why
A management company’s ability to form positive, productive relationships with competent and reliable vendors can make or break its ability to deliver for its client associations. From landscapers, pool service companies, and maintenance firms to attorneys, accountants, and insurance agents or brokers, here’s how to form and maintain successful relationships with your vendors.
Due diligence can seem like a hassle, especially if the board doesn’t mandate it, but the process can save you a lot of grief down the road.
According to Brad van Rooyen, president of HomeRiver Group-Florida, the management company for about 160 associations in the state, boards can assume different levels of involvement in due diligence. “You’ve got boards that take recommendations from the management company without much due diligence on their own, usually basing the decision on price, and then others that want to do the whole vetting process on their own.
“Other boards trust the vendors we bring to them but also do their own due diligence on those vendors.”
Whoever steers the due diligence, conducting online searches and reading reviews is just a first step. You also need to speak with former and current clients.
“Vendors will give you a list of references, and, if it looks deep enough, people will just assume they’re good without actually calling,” van Rooyen says. “But it’s good for board members to talk to boards in other communities that have used them.”
Paul Grucza, director of education and client development at the Seattle-based management company CWD Group, Inc., suggests looking into a vendor’s client base, too.
“I make calls to find out if a vendor has done association work before,” he says. “If they’ve only done commercial or multifamily work, I’m not going to go with them. It’s so different in an association, where the owners are watching.”
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