Can You Manage? Property Manager as Service Provider

When the term "service provider" is used in reference to real estate, usually people take it to mean laundry facility or storage-locker companies, or maybe the firm that runs your building's in-house fitness center. The term isn't often applied to managing agents"¦ although perhaps it should be. After all, your building's managing agent is the professional at the top of the pyramid when it comes to interacting directly with all those other professionals on behalf of your board and residents.

"Managers do everything," says Michael Berenson, president of Manhattan-based management company AKAM Associates. "From overseeing day-to-day operations, organizing trash removal schedules to seeing to exterior leaks," while all the time maintaining the delicate balance between answering to the board while also being a professional in his or her own right, with connections, insider information, and (hopefully) years of real-world, hands-on experience. Looking at your managing agent as a professional service provider - rather than as a casual, all-purpose employee - may inspire your board to communicate its needs clearly and reasonably, evaluate your agent's performance, and make the most of a very important working relationship.

Not Just Another Employee

Though at first glance your managing agent might seem like another - albeit more involved and more interactive - member of your building staff, he or she is actually quite a bit more than that. According to Sam Irlander, an author, educator, and president of Parker Madison Partners, Inc., a Manhattan-based real estate leasing and management company, "[The relationship] is that of employer/employee, but not necessarily in that context. What many directors don't realize is that under the law, to collect maintenance or rent, you must have a broker's license - you must have an agent/principal relationship. It's a fiduciary relationship, and boards may not be aware of that at all; they may hire a manager with little focus beyond the most basic things they're paying for."

Rosemary Paparo, director of management for the Manhattan firm of Buchbinder & Warren, agrees; "I don't know that [managing agents] are employees - at least not in the strictest sense. It's a relationship with a client, more than an employer/employee relationship, like with a porter or service person. There's a certain wider scope of work an agent does."

Along with the managing agent's licensure, he or she very likely possesses expert knowledge of a range of building-related issues that the average volunteer board member can't even begin to guess at. "An agent should have a directory or Rolodex to call upon to answer specific questions," says Paparo. "Your agent doesn't need to know everything, but they need resources to call upon if they're out of their depth." Things like zoning, building codes, the structure of your building itself, the contractor bidding process, and so forth are what you pay your manager to know about - or find out about - and advise your board on when questions arise.

Rules, Roles, and Rifts

Along with the questions, however, can come friction - particularly if a board insists on pressing forward with a poorly devised policy change, or an expensive project that may jeopardize the building's finances. While the board is the ultimate boss, the manager often has the most practical experience, and as such deserves a certain amount of deference. According to Berenson, "The agent really has to go with the board's wishes - unless it poses a safety or legal violation - but we're pros; we make our recommendations and give our reasons. We've gone through every type of circumstance a building could face, and we try to lead them in the most efficient, cost-effective direction."

But where is the line between your managing agent's dominion and that of your board? According to Paparo, while your agent may have the inside track on haggling over contracts or navigating the city's Byzantine building codes, "He or she can present options and offer the board information to help them form a considered opinion, but in the end, it's the board's decision - and the co-op's money."

Don't Hassle Me: I'm Local

In a nutshell, your managing agent is there to see to things so your board doesn't have to. A top-shelf manager will allow your board to do its job - which is to handle issues of building-wide policy and procedure - and swing into action when the time comes to put the board's decisions to use, and that means interacting reasonably and equitably with residents. After all, even though not everyone in a building can sit on the board, all of them are shareholders in a corporation or property, with a vested interest - both financial and emotional - in having that building run to certain specifications. Many residents see their managing agent as a conduit for expressing their needs and complaints to the board, and expect the agent to act as intermediary between them and their directors. While it's not reasonable to expect your manager to entertain every single request made by every single shareholder/owner in the building, it is reasonable for a lay resident to expect a prompt, courteous, sincere response to a legitimate concern from their property manager. A good manager respects that, and does what he or she can to see to it that the wishes of shareholders are heard.

According to Irlander, "A manager should be as courteous to [residents] as anybody. Their responsibility is the same: they have a fiduciary duty to shareholders as well as to the board, and while their instructions come from whomever engaged the managing agency's services, the agent should respond to shareholders, going back to the board with any unusual requests or issues that fall beyond the scope of the agent's authority."

It's Not You"¦It's Us

Just as a cleaning company doesn't just rely on one guy with a squeegee to handle all their contracts, a management company should have a team of people ready and able to assist their agents with running the buildings under their care, and directors able to match buildings with compatible agents. Paparo says, "You look to match the building with the management executive. Sometimes the same person works with the same building for 25 years, and sometimes a building will go through a few different management executives before finding a good fit."

Occasionally, however, what might have seemed like a good fit turns out to be not so good. "[Sometimes] it happens that that necessary synergy just isn't there," says Paparo. "You need easy communication, otherwise it becomes adversarial and just doesn't work." And what happens if that synergy never really materializes? Should a board sever ties with their management firm entirely, or simply switch to a different managing agent within that firm? "It's happened very, very rarely," says Paparo, "but we have let buildings go whose demands exceeded anything we could reasonably do for them."

According to Irlander, it's perfectly all right to switch from one agent to another within the same management firm, though if one of the firm's principals happens to be overseeing your building and you just can't get along, it might be wiser to switch management companies entirely. "If you're working with a principal and your philosophies are in constant conflict, it's reasonable to suspect that those philosophies and methods will be universal with the firm's other agents," says Irlander - at which point it may be time to part company and start fresh.

For his part, Berenson sees to it that "We try to find [agents] who can work with vastly varied personalities, but if it just isn't working, we'd make a change before it becomes a real problem."

How You Doin'?

An effective, efficient managing agent ultimately answers to your board, and it goes without saying that open channels of communication between agent and directors is the key to getting things done with a minimum of drama and disruption. There's no specific set of criteria by which to judge the performance of your manager, but according to Paparo, "A good test is when [as a manager] you're taking care of problems so expeditiously, people don't think you're doing anything."

Says Berenson, "The key is follow-up - taking items off the agenda. If a board can meet and make actual decisions and not revisit months-old items, you know the agent's being proactive."

To insure top-quality performance from an agent, Irlander advises boards to "not be complacent and let the manager do everything. Be hands-on; follow up on instructions given and make sure that your manager is executing them - not the building staff. Your staff should not be out getting bids, in other words."

The pros are quick to point out, however, that "doing a good job" does not include doing special favors for or giving special treatment to board members themselves, just because they're board members. Paparo cautions agents against blindly going along with the board, regardless of the circumstances. "Of course, a management company should never get involved in something illegal - if something's patently illegal, the management should seek their own counsel. New York City is a small town in many ways, and an agency must maintain a good reputation for discretion and tact - sometimes you just have to step back."

The Last Word

Of course, outright malfeasance is much less likely to happen in a residential building than common, run-of-the-mill misunderstanding and taking-for-granted. If you're fortunate enough to have a devoted, hardworking managing executive looking after the needs of your building and the people who call it home, you owe it to your agent and yourself to tend to that relationship, keeping it healthy and productive into perpetuity.

As usual, that's a tall order that may sound easy, but requires commitment, diligence, and a measure of compromise and diplomacy to really work. Obviously, communication is vital to maintain a mutually respectful working relationship. If your board can't communicate its wishes and requirements to your managing agent, there's no way the agent can do his or her job - unless they're a clairvoyant along with being an expert in running large urban apartment buildings.

A good way to educate yourself about the various roles and responsibilities of managing agents is to check out the New York Association of Realty Managers (NYARM) Web site, or the continuing education catalog for New York University (NYU). Both have literature you can order and resources to contact for more information, but more than anything else, what will maximize the positive relationship between your board, residents, and manager is plain, ordinary respect and professionalism. What that in place, the rest is easy.

David Garry is a freelance writer living in New York City.

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