No Sale Ever Final
Negotiating With Vendors
Whether you’re part of a giant co-op the size of Co-op City, a 21-story building with over 15,000 residential units, or a small 25-unit condo in Staten Island, whether your building is self-managed or uses a management company, your board will at some time have to make decisions on how to deal with vendors.
These vendors can be either suppliers of goods, such as lighting fixtures, stationery supplies, bathroom supplies or computer equipment; or services, such as painters, flooring installers, exterminators, fuel oil suppliers, elevator service persons or janitorial services.
No matter what type of vendors you’re dealing with, good relations, and knowledge about what products and services are being offered are the key.
How To Find Vendors
Who usually makes the decisions about vendor choices and service boards—is it the managing agent, the board, or some combination?
“It’s a combination of the two—sometimes one, sometimes the other,” says Wayne Bellet, a third-generation construction professional and head of the Manhattan-based firm Bellet Construction, which specializes in waterproofing, roofing and exterior maintenance.
Jeff Shernoff, an attorney and former board member for the Cadman Towers co-op in Brooklyn Heights, reports that in his co-op, the manager has discretion up to a certain monetary amount (when he was on the board, it was $5,000). Above that amount, however, the board must obtain three bids.
Boards can find vendors and service providers in several ways—through advertisements, through trade directories such as the one this magazine produces, through personal recommendations, through doing research.
“It could be a trade show, it could be a job that was done on your neighboring property, it could be an ad in your [The Cooperator’s] Directory of Co-op and Condo Services,” says Bellet. “Individuals will meet with us, talk to us or read our material, and get back to the decision-makers.”
“The more pro-active management companies go out and find the [service] companies,” says James Slattery of Stuyvesant Fuel Services, a large home heating-oil and natural gas distributor located in the Bronx. “Some boards are very pro-active, and the board and the directors solicit their own bids.”
Shernoff says that in his experience, “most of the time, management finds the company and makes the recommendation to the board. That’s part of their job as manager—they’re supposed to know people.”
At times, he says, some very large boards may seek out other board members throughout the city to obtain recommendations, but he says this is an unusual situation.
Finding vendors through ads or directories or word of mouth is fine, for the beginning stages of the process. But once a vendor is identified as a possibility, the company must be researched; and once it is tentatively chosen, its references must be checked.
This is usually done by the management company or someone on the board, says Richard Singler of Singler Enterprises, a Brooklyn-based firm specializing in interior design and maintenance. “If we go for an interview, we have to supply them with references, and they check them out,” he says. “Normally, there are board members who do it.”
The degree of people’s involvement in the co-op is key, says Bellet. “If there is apathy, a sole building manager who is overworked in the first place is chosen,”
But if the co-op board is very involved in the process of choosing providing services and supplies, the job of checking these references is delegated to a knowledgeable board member, a committee or a subcommittee.
As we’ve mentioned, condos and co-ops come in all shapes and sizes: Tall buildings like those on the Upper West Side or Upper East Side, small three- or four-story buildings like many in Staten Island or Queens, or a group of many buildings spread out over a large expanse of land, such as Co-Op City and the Amalgamated Houses in the Bronx, or Penn South in Manhattan. How does dealing with a larger complex compare with a smaller building?
According to Singler, larger buildings or groups of buildings, as one would expect, “have a little bit more money than small places, and have a better budget.” Still, he says, “Smaller buildings are part of the job.” As far as spread-out developments are concerned, Singler has done some jobs in that type of development, such as Waterside in Manhattan’s East 20s. In such large, multi-building developments, he says, a job can require more manpower and more resources—“it’s like having several smaller jobs.”
On the good side, at least for the boards, a large building or development attracts more potential vendors trying to get business, so this inevitably has an affect as the vendors try to under-bid each other, thus lowering prices.
To Bellet, it’s basically the same—the quality of the relationship, not the size of the building or development, is important. “If you work for a humongous organization, the likelihood that I can make more money is not always as much as you think. I can make as much money with several good relationships with small buildings than with one lousy relationship with a big one.”
Just like any business, a building management company typically has a service contract with its vendors. And like any contract, it should be reviewed periodically.
How often? Slattery believes that even though most service contracts are renewed on a yearly basis, the board or manager should look at them and try to reassess them twice a year. Shernoff, the attorney, says, “A contract has a given period, and at that point [when it ends] you reassess it. If you’re satisfied with your service, you renew it. If not, you shop again.”
Bellet, whose firm specializes in exterior restoration, takes an unusual view—that “service contracts are a rip-off. I find nickel-and-dime customers to be counterproductive. If I do this job for you and you say this job is wrong, I’ll fix it no charge because I want to keep that relationship. I have a copier in my office,” Bellet continues. “And I don’t want a maintenance program. When it breaks, I call them. If it breaks four times in a row, I want a new copier.”
More Buildings Equals Buying Power
Whether dealing with goods or services, boards and management companies can often get a better price if they buy in bulk. Some developments are large enough to buy wholesale on their own. Most, however, have to get together with other buildings.
Peter Grech, president of the New York Superintendents Technical Association (NYSTA), says that any discounts should be arranged through the management company for maximum effectiveness. If a management company handles 50 buildings, for example, “That’s the buying power right there.”
On the other hand, if a medium-sized co-op or condo building decides to pool together with a similar building across the street to buy supplies or contract service providers, there’s still a discount, but not as much as if a giant management firm were involved.
How can boards negotiate for better prices? Well, for one thing, says Grech, they should let the management company handle it.
“Imagine if the vendor, instead of dealing with the manager or managing agent of several hundred buildings, has to deal with each and every building. If the board does [the negotiating], then that’s micromanagement—it’s not their area of expertise.”
Regardless of whether the board or the management company is involved, the best way for a co-op or condo to deal with a vendor, Bellet believes, is “to be a good payer. When you pay me once a month, that’s appreciated, but when you tell me you’re going to pay me every 14 days, you become gold in my eyes.”
Bellet also says that in many cases, boards need to have the wherewithal to know which decisions are simple and can be handled without consultants, and which need the input of a management company or a skilled professional.
“What I find the co-ops do, since they’re not skilled with the items they’re buying,” says Bellet, “is they baffle themselves with baloney—they make like it’s heart surgery.” He says that some things are simple and don’t need great expertise, but for others you need professional expertise, pure and simple. It all depends on the job, he says.
The bottom line, says Singler, is that you can have a discount, but you can’t negotiate too far down—you’ll lose quality. You need to know what you want to buy, what your volume will be, what your desired payment terms will be.
And, when it all comes down to it, you still get what you pay for. And that’s important for the residents and the building’s bottom line.
Raanan Geberer is a freelance writer living in New York City.