Posted by Leonard Steinberg on June 11th, 2011
New York Managing agents perform the unenviable task managing all aspects of a building’s operations and financials including staffing, repairs, maintenance, etc. The managing agent reports to the board of the building, a group of people elected by unit owners to oversee the physical and financial well-being of the building. Often these boards are to blame for the inefficiencies and quirks buildings display, yet many times I find its the managing agents who are to blame. Here are some very important roles they perform towards where I see dramatic room for improvement:
1) The processing of applications to purchase or rent. Managing agents charge large fees for this, often up to $ 1,000 per application. Assuming an application takes 3 hours to process (most take less than an hour!) that would equate to an annual salary of $ 700,000.00…… Applications should be processed within 5 days and passed onto a board for review, along with notes if any explanation is required. 5 days is more than adequate to run background and credit checks and review the documentation. In turn, boards should review these packages within one week: claiming to be ‘too busy’ is fair, but then I strongly suggest you should not run for the position of a board member.
2) The processing of applications to renovate: Again, someone in the agency should be assigned to this and fully understand the process. Again there are large application fees associated with these applications….work for these fees! If the renovation requires building architect scrutiny, pass them on immediately. Waiting for 3 weeks is simply inexcusable. Making buyers wait weeks and months for these applications to be reviewed is a thorough disgrace. Mostly the scrutiny involves a few hours work. Highly complex renovations are much easier to review by arranging a simple architects meeting: 1 hour. Not 6 weeks. ALSO: managing agents should have very clearly defined alteration agreements that clearly specify what the building’s expectations/restrictions are. No one can follow laws if they have not been written. Not everything should be so gray. And no, it should not require a 6 week process to be able to paint an apartment!
3) Financials: If you and I don’t hand in our tax returns on time, we get fined: managing agents should be fined if they do not have financials in place by a reasonable date. And the financials should be clear and organized. They should advise their Boards accordingly, preparing them to be organized. Boards should keep up with changing laws to advise boards accordingly for financial adjustments to keep buildings marketable in the eyes of banks.
4) Responsiveness: not responding to e-mails and calls is un-acceptable. Taking 5 days is pretty lousy too. 24-48 hours is really the max. Cannot do it? Take on fewer buildings or hire more staff! If a lawyer needs an appointment to scrutinize building info, respond promptly. You are there to help the process not hurt it. If something is missing in an application, notify all parties promptly…..not 3 weeks later!
5) USE TECHNOLOGY: Charging for every little item is pushing it, although it may be necessary considering the costs in operating a business in New York. So if a lawyer needs financials or an offering plan, make them available on line, and if they have to be purchased, make the process simple + easy. Technology has password protection and log-ins. Most application forms should be available on line and that way they are automatically updated. Create a ‘building questionaire’ for banks online answering all the questions all banks would ask (any weird bank requiring additional info. could always e-mail that one missing item) and update this info regularly. Charging $ 100 each time to fill out this info is somewhat absurd…..if it takes 10 minutes to do this work, that equates to a salary of $ 1,2million/year…..And maybe this time would be better spent doing the critical things buildings require.
6) COMMUNICATE! If you have changed a board application’s requirements, let owner’s know this. Help the process. It will make your life easier too. Let unit owners know where exactly their building stands at the annual meting….inform them, educate them, communicate to them the need for efficiencies.
7) VISIT YOUR BUILDINGS: Go and see for yourself what is going on at least once every two weeks. Speak to the staff. LOOK. Anticipate.
If you are under-staffed, hire more people. If you have bad staff, replace them. If your staff is angry, pay them more. Line up the best professionals for advice and guidance in specialized areas. Get rid of any resources that have proven to be difficult or inefficient.
I lived in a Fifth Avenue building recently where an elevator shaft existed behind my bedroom wall creating horrible noise: after many failed attempts to get the managing agent to address this properly, I contacted the building Board president directly. That infuriated the managing agent who then turned on me. Instead of focusing on the problem that caused me to call the president, they focused on protecting their ‘image’….did they have a ‘special arrangement’ with the elevator company and the developer of the building to protect them from being identified as incompetent or worse, corrupt? I never found out. I moved out and the apartment was sold for a lot less than its real value had the problem been properly resolved. I have seen apartments de-value when a building is known to be ‘difficult’…..often this is the Board’s fault (yes, including condominium boards!) but often it filters back to an ineffective managing agent.
Managing agents should not slow down or hamper the sale/rent/renovation process: they are paid entities and by doing so can actually de-value the properties they are supposed to be helping. So while this entire ranting post may be viewed by some as an angry broker looking out for his own needs, being a broker who also sits on 2 boards, I fully understand the value of a professional managing agent, and the damaging effects of a bad agent on the valuations of real estate.