Do you want to know how to choose the right management company for your HOA? Keep on reading, then.
You know - I don’t think there’s any point in sugarcoating this - Having to select a new management company is hardly a task you’d welcome with excitement.
In fact, unless you’ve done it before, you probably, don’t even know where to begin. And yet, you need to figure out which vendor would be a great fit for your association.
I wrote this guide to help.
I’ve been quite involved in this process. My product - HOALife - helps homeowners associations manage their ops and violations. Plus, I’ve been involved in a HOA management company too. In other words, I’ve experienced both sides of the story. I know what works, and how to create RFPs that connect HOAs with the best vendors.
So, below, you’ll discover everything you need to know to create RFP for your HOA management services. Plus, you’ll also learn what factors to consider when evaluating proposals from management companies.
So, after reading this guide, you’ll know exactly:
- What to do next to start searching for a new HOA management company, and
- How to spot the right one among all the proposals you’re going to receive.
It’s a lot to cover, so let’s get right to it.
What is an RFP for HOA’s management services?
I used this abbreviation, RFP, earlier, and I think it warrants an explanation.
So, an RFP stands for a request for proposal.
As the name suggests, it’s not a document you receive from vendors. Instead, it’s one that you create to provide guidance to companies who are interested in working with your HOA.
Typically, an RFP document details what information you want to know about a potential supplier or vendor. It also outlines the project’s specifics, the scope of work, requests for quotes. In many cases, RFP also outlines the process you’d like interested parties to follow when pitching to your HOA.
Now, it’s not a secret that many service providers dread RFPs. For one, they cannot reply with generic bids to a request for a proposal. By its nature, the document asks for specific and custom information. But don’t let the negativity around RFPs discourage you from creating one.
Having an RFP, and collecting bids based on your requirements, will help you quickly assess potential vendors in relation to your specific project. As a result, you’re going to save an enormous amount of time sifting through all those submissions.
But that’s just one benefit of issuing requests for proposals for HOA management services.
The RFP helps you achieve another two objectives too:
- RFP helps you introduce your community and the association to potential vendors. With it, you don’t need to rely on the company to do research on its end and learn more about your HOA. That’s to the RFP; any management company interested in working with your HOA will be able to learn about your situation, the community’s needs, and your requirements.
- The RFP and bids based on those requirements will help your board to understand how a prospective management company operates. You’ll discover its processes its approach to working with associations like yours, and will be able to assess quickly whether you two are a fit.
A side note - There is one other benefit of sending RFPs, and it has a lot to do with the negativity towards those documents I mentioned earlier. You see - many service providers dread or even openly loathe RFPs. This is largely because these companies prefer not to invest time and effort into potential projects until they’ve actually won them. As a result, they prefer to send a generic proposal they’d have on file and be done with it. But this also means that any management company that completes your RFP is serious about its clients and building strong relationships with them. And that’s an amazing first indication that they might be a good provider.
What to include in an RFP for HOA management services?
We’ve already discussed that RFP is your opportunity to explain the project to potential vendors and educate them about your HOA.
Now, let me show you what it means in practice. Specifically, here’s what your RFP must include for it to work and attract the right bids.
Your RFP must start with a quick overview of the entire request. This doesn’t have to be a long section. But it should include a general description of the proposed engagement with your HOA.
Here’s why the summary is so important - Many companies you send it to will use it to assess whether the project is for them. These companies will review the overview of the scope of work and your expectations, your location, and other factors that help them determine whether to respond to the RFP or not.
Information about your HOA and the community
Before you talk at length about what you expect from the potential management company, it’s a good idea to introduce your HOA. This way, the person reviewing your RFP can view those requirements in the context of your current situation.
And needless to say, this is invaluable for the management company to understand the actual scope of work and requirements.
Here’s what information you should include in this section:
- Your community’s location
- Its size,
- Properties type
- Any community amenities,
- Your current staff and staffing structure,
- The largest challenges your community faces at present
- Any other information would help the management company understand your community and the HOA.
Scope of Contract
This is where you specify what needs your HOA expects the management company to deliver. Don’t feel bad if this section turns out lengthy in your request for proposal. It actually should be! The more information you give a prospective vendor, the better proposal you will receive after all.
Now, there is no unified way to write an HOA scope of management services. Each community’s situation and requirements are different. But there are certain things that this section absolutely must include:
- The reasons why your association is looking for a management company. Perhaps you’re not satisfied with your current vendor? Or maybe you’ve been trying to manage the HOA on your own, but the scope of work simply became too overwhelming?
- Your current situation
- A list of services you need help with from the management company
- Additional responsibilities you may or may not ask the company to take on.
- Proposed project timeline - when your board will decide, and when the new management company will begin the contract.
- People responsible for making the decision.
Management company background
To properly evaluate a management company, you must also get to know the business. And this is the section where you can specify what information the proposed vendor should deliver.
Again, what you ask for will largely depend on your HOAs current situation, past experience, and other factors. In general, however, I recommend that you seek the following information about potential vendors:
- The company history - how long they’ve been in business, how many other HOAs they work with, etc.
- List of management staff
- Processes and specializations
- General scope of services the company provides
- Software the company uses, and platforms it might require you to purchase for them to work
- Support options
- Budget and costing breakdown
Requirements for submitting the proposal
Once you’ve told the prospective vendor what to bid on, the next step is to explain the application process. That’s what you should cover in this section.
Tell the company where to submit the proposal. Also, remember to let them know what the deadline for submission is.
Additionally, you could include information about the next steps on your end. This will help the company understand what will happen after they send you the bid.
So, use this section also to explain:
- Your timeline for selecting a new vendor. From when the evaluation process will begin to when you plan to make the final decision.
- Your process for choosing a management company. Most vendors will be interested in hearing about this. In particular, they might like to know whether you envision other steps in the process or might be asking for any additional information, meetings, interviews, etc.
How to evaluate responses to your HOA RFP
In the previous section, I showed you how to ensure that you get the best possible bids and proposals from management companies.
Now, let’s discuss what to do after you’ve received them.
The process is actually quite simple. But there are also several things that many HOAs forget about, so let’s go through all this in turn.
#1. Read every bid carefully
This seems like a no-brainer, right? And yet, it always amazes me how many HOAs just skim proposals, focusing on a few elements that interest particular board members - the quote, for example.
Yet, there is more to every proposal than just the price.
For one, your job when reviewing proposals isn’t to find the cheapest vendor. If that was what it was, the whole task would be ridiculously easy.
No, your task is to find a management company that will be a good fit for your community. And that’s a completely different matter.
So, read each proposal carefully. Pay attention to the way the company communicates information. Review their proposed scope of work. And most importantly, look for signs suggesting that they might be approaching the project in the same way as you.
#2. Consider how well the company has responded to your RFP
This is another factor that can signify whether you two are a fit. You can approach reviewing the company’s approach to your RFP as an indication of whether they follow the client’s instructions. If so, they might be a great partner. But if they skimmed elements of the RFP or even ignored some sections, you might consider it a warning signal.
In short, check whether the management company followed your instructions. And also, see if they provided all the information you requested.
#3. Look beyond just the price
I understand why you might want to consider price as the most important factor in this decision. Not all HOAs have significant budgets to operate. You might be strapped on funds, and thus, the cheapest vendor might seem like the best option.
But that’s not always the case. Instead, focus on how well the company can deliver on your needs.
Naturally, you can discount companies whose rates are far beyond your budget. But if some are on the borderline, look at them beyond the price. The chances are that by assigning a slightly higher budget to this engagement, you can hire the best possible vendor for your HOA.
#4. Don’t hire the vendor based on the proposal alone
Finally, add an extra step in the process, after the proposal. In fact, I recommend that you interview at least two most promising companies in-person. Schedule a meeting with them to go over their proposal, discuss possible collaboration, ask any additional questions that you may have, and get to know each other.
The proposal is an important step in the process. But it’s the meeting in-person (or through a web conferencing tool, of course) that will show you whether you and the management company are on the same page.