One of the most difficult decisions boards of co-ops and condos have to make is who should
manage their buildings. While boards are obviously looking for management that has both the qualifications and experience to handle a building such as their own, they should also be looking for a firm that will reflect the personality of their building community. Active research into the firm being considered and knowledge of what your building requires to keep it fiscally and physically fit can help the board make the best possible choice.
According to Howard Schechter, a principal with the law firm of Schechter Brucker, PC, which represents 85 local properties, A board has to decide what kind of company is going to be the closest match to the service the property requires.
Look for a company whose managing agents have had a successful record of managing buildings comparable in size, age and condition to yours, advises Jim Sileneck, past president and current board member of a co-op at 61 Jane Street.
Asher Bernstein, president of Lawrence Properties, a real estate management firm, advises, You want a company that will ask why you're leaving your current company. That way, both the board and the new management company understand the property's particular requirements and what the board considers significant issues.
Check References & Credentials
David Kuperberg, president of Cooper Square Realty, a Manhattan management firm, advises boards to look for industry certification, such as that given out by the Institute of Real Estate Management (IREM) and the New York Association of Realty Managers (NYARM). State law mandates that real estate managers must be licensed real estate brokers, so you should check these credentials as well.
Patricia Kantor, partner with the law firm of Edwards & Angell, advises her clients to ask for and call references from companies they're considering. Ask all the candidates to supply the names of buildings they work with, and then do some independent work and seek out others that weren't provided by the company. Then, contact the references and ask not only what they like about the company but also what they don't like.
Examining the firm's internal resources is another way to help the decision-making process. Adele Zasloff, board president of Gotham Towne House, a co-op on East 57th Street, says, You want a well-organized company that knows how to work effectively with a property like yours and has the systems in place to do so.
The firm's internal resources are very important, says Sileneck. They should have a strong accounting department and back office, and employees who are knowledgeable and experienced in building engineering. And, he adds, A company's ability to generate comprehensive yet understandable and succinct management reports is essential.
Once you've zeroed in on a potential firm, it's time to make an office visit, says Mark Moskowitz, president of The Argo Corporation, a Manhattan management firm. Visit the company's office and see how they're organized, he says. Moskowitz also feels that while meeting the managing agent that would service your property is important, it is equally important to meet the support staff, controller and bookkeeper for the firm. By doing so, the board can come away with a clearer picture of how the ffb firm operates and what sort of personalities the board would be dealing with on a regular basis.
Ask how seriously the company takes the budgeting process, says Neil Binder, president of Bellmarc Regal Management. Find out how they plan to work within your existing budget to provide the best service for you.
Demand Personal Attention
In evaluating the firm the board has its eye on, there is one more consideration to take into account. Too many times a board will hire a firm that prides itself on personal service, only to find the company has too many buildings in its portfolio to pay careful attention to one building, namely yours.
You have to be sure that the firm is not carrying so many buildings or units that you won't get adequate attention, warns Sileneck.
Service is all-important, agrees Sandy Paul, board president of a 200-unit co-op on West 20th Street in Chelsea. Look for a company, no matter what the size, that will pay attention to your property.
Bob Marino, board president of Columbus Common, a 60-unit condo on West 90th Street, feels that the managing agent should be willing and able to follow through on all issues, however big or small, and keep him informed on how close they are to solving the problems.
Working With Other Professionals
While no one understates the importance of keeping the lines of communication open between management and the board, few pay particular attention to how the managing agent interacts with other professionals. The managing agent must have a good working relationship with a variety of reputable vendors and contractors and the ability to work well with your property's other professionals, like accountants and legal counsel, says Herb Stratton, board president of a West 23rd Street co-op.
The best management companies keep the other building professionals apprised of developments in any given property, says Jarvis Irving, a CPA whose firm services 60 area co-ops and condos and who is board treasurer of his own co-op. From an accounting perspective, management should provide timely financial reports that the board can understand and the property's accountant can work with.
Marcia Taranto, president of the real estate management firm Taranto & Associates, feels it's important for management to keep all building residents informed as well. They should be sending timely notification of schedules that are going to affect all residents, like elevator down-time. People in the building have a right to know how and why their building is being run in a certain way, she says.
Other factors that should go into the board's evaluation process have to do with ethics and trust. Boards should make sure that the companies they're looking at don't have a single master account or tied accounts for all their properties. The accounts should always be segregated, advises Steve Wagner, partner in Wagner, Davis & Gold, a law firm representing more than 100 properties.
I like to see management agreements where there's a cap on the amount of a property's money that can be spent without the board's consent, he says, as well as an escape clause if the relationship does not work out.
On the subject of insurance, Marvin Gold, president of Marvin Gold Management, says, Any firm the board is considering should be carrying not only a substantial fidelity bond but in today's world, errors and omissions insurance is also extremely important.
The rewards are plenty for those boards who put in the time and effort to research their management candidates.
If a board is prepared to ask some tough questions, both about their own property and about the companies they're considering, they can get the answers they're looking for before they make their decision, says Glen Kuffel, president of Pride Property Management. It's these answers that can yield the most productive relationship between the board and their new management company.
Ms. Dershowitz is a contributing editor to The New York Cooperator. She recently co-aut 880 hored a book entitled, How to Choose the Right Management Company for Your Residential Property.