FINDING A NEW MANAGING AGENT, P.2

2. Winnow it down by price.

A property that can only pay $1,000 a month has fewer options than one paying $5,000 to $10,000 a month. As a rule of thumb, Carlson says, management companies cost an average of $300 per unit per year in the outer boroughs, and $400 to $450 per unit in Manhattan.

"You get what you pay for," Ross warns. "You have to understand market rates and be flexible. One of the main jobs of a board is to get a crack professional team. If you're weak in any one area — in management, or accounting or your lawyer — the entire co-op is going to suffer." He advises not to go for the cheapest solution, but for the best solution you can afford.

3. Check references.

Ask for a list of all the buildings the firm has managed, not just the ones the manager selects. Then call them — you may get lucky. "Some people think checking references is a useless exercise, says Ross, "but that's not always true. You have to get the person on the other end of phone line to relax so they'll speak their mind. …[I]n one case we found that the management company had good business skills but they didn't have the people skills or the management skills."

"You can read between the lines a lot," adds Jerry Sherwin, president of the 116-unit co-op at 181 East 73rd Street. "We checked the references ourselves, we asked board people how the managing agent handled major projects as well as how they worked with the super and the day-to-day staff. We also asked the agents point blank why certain buildings didn't work out for them."

The board went deeper with the finalists, conducting a background check that included a Dunn & Bradstreet investigation of the managing company's finances, plus background, credit and criminal record checks of manager candidates. "It may sound like overkill," Sherwin says, "but the better-safe-than-sorry rule applies here. You've also got to go with your gut feeling because personalities are involved."

Adds Shoenthal: "When we switched management companies, we did not do credit or criminal background checks. We're not a white-glove building, so mainly we were looking for a company that was compatible with us. That said, "You have to talk to all the management company's references and probe them for as much information as you can get."

4, Look at proximity.

How close is the manager's office to your property? Proximity can mean more frequent visits and better service. "It's helpful if the company is handling other buildings in your area because it means they'll already have an agent traveling to your area, and as a result you'll get better service," Ross says.

5. Visit the company's office.

"The board's most important relationship is with the person who does the day-to-day work," says attorney Joseph Colbert, a partner at Kagan Lubic Lepper Lewis Gold & Colbert. But he advises that boards should visit the management company and see who you'll be dealing with in the back office and meet the manager's assistants. "These relationships are very important. Know who's going to be serving you."

6. Interview the actual site manager, not just the company principal.

"Most initial interviews are with the management company's salesman," Carlson says. "Everything sounds so rosy. Once you pick your finalists, you should interview the person who's going to be in charge of your building. If that chemistry doesn't work, the marriage is not going to work."
"The critical thing is you want to meet [both] the people who own the company and the person who will be doing the day-to-day work managing your building," Sherwin says.

7. Trust your impressions.

Shoenthal is firm on this point: "Go with your gut. If you feel a person is giving you a line, he probably is. You also have to find out if the information they're imparting is accurate. It's very important that there's a good comfort level between the board president and the manager [and] with the rest of the shareholders or unit-owners."

Adapted from Habitat July / August 2008. For the complete article and more, join our Archive >>