Our Management Fees are Too High…or are they

One of the toughest challenges I have faced in submitting proposals for the management of a community is that there is no easy standard to which I can compare our fees. Feedback from potential clients has varied greatly from our fees being right in line with the other proposals, or from too low to too high. I had to find out why there is such a wide range out there, and my question has been answered!

It has come to my attention (and, more importantly, to several communities’ attention) that the money communities pay to a management company extends significantly past “management fees”. Some were completely surprised by the extra charges, some were aware that there would be extra charges, but all were shocked by the amount of charges that went above and beyond the quoted management fee.

I was shocked myself, and it boils down to what I believe “management” is. Is it to manage the community’s financials by doing their account receivables and payables? Certainly. Is it to manage the communication between the Board and its homeowners? Absolutely. Is it to manage emergency situations in which residents and vendors are involved? Of course. Then why would I charge the community extra to “receive” a homeowner’s payment? Or, why should I charge an additional “administrative” fee to send a violation letter? Or, why should I charge an “emergency on-call” fee? In these cases, what does the management fee cover?

At the end of the day, a management fee is a management fee is a management fee; it shouldn’t be a fee you pay us monthly just because it is a line item on your budget – it should be the fee you pay us to manage your community. Postage, copies, and storage – yes, I agree that these fees are in addition to a management fee because they are items needed to manage your community. But if I were to nickel and dime every association for everything we did to manage their affairs, the accounting itself would be a full-time job. How in the world would there be time to actually manage the community?

I have made it a point not to talk negatively about my competitors, whom I respect greatly. I actually consider it bad business practice to do so, so I will never call out a company that does the above. As a shrewd businessman, one may even respect the fact that a company has found a way to minimize their overhead costs. But that leaves the community, you as the homeowner, to pay for that business’s overhead. I say, analyze your financials, check out the companies you do business with, and make sure you are paying a company to service you.