Management Pricing – Board Member Beware
When evaluating management companies many board members focus solely on the monthly management fee. Logically that makes sense. Did you know, however, that many management companies make their "real money" by selling their client's ongoing in-house services?
Research the issue, ask around and talk to experts. Working with a management company that sells add-on services such as maintenance, cleaning and landscaping will almost always lead to the association being overcharged. The less the board pays attention, the more they get taken advantage of.
Accord has spent many years educating the community about these unethical practices and providing other management companies with an example of integrity to follow.
Isn't it good that the company can also provide additional services?
Absolutely not. Whether a management company tells you that having these in-house services is a benefit due to convenience or lower pricing, this never ends up being true. You’ll also be told that while they have the in-house services, you’re not required to use them. It would be foolish to believe that is the case.
Be logical and think about the process from the management company’s point of view. If a maintenance issue arises and they want the job to be awarded to their in-house maintenance group, how easily can they "push their bid" through without any competitive quotes? How much effort are they going to put into finding real, competitive quotes?
Consider the case of an emergency repair. Without the time for a quoting process, which company do you think will get dispatched? How will you know if the pricing is competitive? You won’t.
The real question becomes, how much time does the board want to spend policing the management company to protect their funds?
A Clear Conflict of Interest
While there are currently no laws against a management company selling related services to their clients (We believe this will come soon), it is difficult to argue that this practice is in the best interest of the association.
We believe this to be a matter of common sense. How can you expect a management company to protect the association while simultaneously having a financial interest in selling you the same services you are trusting them to locate on your behalf?
This is the same reason why you shouldn't hire a financial advisor that receives commissions on the stocks that you buy. His or her recommendations would naturally be biased towards the stocks that make him or her the most money!
A clear conflict of interest exists if a management company is expected to protect the association's financial interests while also trying to sell them services to make money. It makes no sense to put yourself in that situation. There are plenty of reputable management companies to choose from that act solely as your management partner.
Unfortunately, this is a completely real, and growing, problem in Colorado. We regularly hear horror stories from board members coming from a management company that provided add-on services. As the economy has worsened over the past 5+ years, these companies have become more aggressive in their need to "sell" their client base additional products.
Setting an Example of Integrity
If you spend a few minutes and go through our website you will notice a few clear trends. We will be your true partner with the sole goal of making your association successful. Just like our existing clients, when we make recommendations or solicit bids, you will be confident that we have no ulterior motives. That is a partnership.
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