The Importance of Vendor Selections and License & Insurance

I’ve not yet met an owner who didn’t want to spend the least amount possible on repairs.  For many owners, the term “investment property” is a fancy way of saying “we are under water and can’t sell it.”   That doesn’t mean that you’re not going to sell one day and net a hefty profit, but not just yet.  In the meantime, items are going to break down, and we know you don’t want to spend much, because it’s already a financial drain from your fun-fund.  We know, we know.  But items are absolutely going to break down, and of course it’s going to happen when you least can handle the financial burden.  That’s how it happens right?  We know. 

Using vendors you don’t know

Many times owners are networking professionals and want to utilize their “hook-ups.”  Someone that they’ve known for years, who used to work on their home when they lived there that did great work.  Maybe it’s the retired electrician or plumber that lives next-door.  Sounds innocent enough, so why is that a problem?  Well my tenant doesn’t know you, they know me.  They trust that I know the vendor that I’m sending to their home.  They trust that I’ve got documents to prove that the vendor I’m sending is qualified for the job, that the repair will be safe for their family to live around and that I know the background of the individual that I’m sending over, and that’s not true.  They think “the Clark Team wouldn’t send someone around my family that they don’t know”.  The truth is, I can’t say any of that about your vendor.  It’s important that tenants can trust us and that we wouldn’t cut corners where safety is concerned.  I don’t give my word lightly and that makes this scenario a problem UNLESS your vendor checks out.

Got a hook-up?

When things break down around the home, and we notify our owners, many times we get the familiar response “wait a minute, let me make a call”.  We get the callback later that our owner wants to send over Billy-Bob your fix-it guy.  He owes you something and this repair is going to be practically free.  Well that’s great, except it’s a violation of your contract more than likely.  Maybe Billy Bob is very handy, but maybe he’s not certified for the repair that your home needs and my tenant is relying on me to ensure that I’ve checked all of these things.  We’d love nothing more for you to get the lowest price on that repair, but I don’t know Billy-Bob, and that means I need to have his credentials sent over to review first.  This usually results in my owner fessing up that the vendor they are trying to use doesn’t have those particular items.  Well now things get awkward.  My tenant moved into a professionally managed home for a reason, so that they could be assured of quality services.  They trust me to ensure that anyone that goes in their home is going to be a licensed and insured professional just like I promised when they signed the lease.

Got a license?  Insurance?

If Billy-Bob is licensed and insured, I’m thrilled to set him up as a contractor to make that repair.  In fact, if Billy-Bob is a rock star, I may add him to my vendor list and start using him regularly, because I love to work with rock stars.  But in my experience, Billy-Bob is working for Joe Smith’s Contracting and Joe Smith has all the insurance on work that he schedules for Billy-Bob for when the call is handled through Joe Smith and using his parts that he trusts.  Right now, it’s “friend” Billy-Bob doing a little side work for cash, and he’s using parts he bought at Home Depot or that he has in his truck from another job.  It seems innocent enough until the electrical issue that Billy-Bob resolved causes an injury.   Maybe the malfunction wasn’t caused by what he did, but that’s what the tenant will think.  The phone call comes to me, not Billy-Bob and not my owner.  I’m the one who has to answer for who I allowed to make the repair, and your tenant wants to make an insurance claim, but I can’t help them with that.  Why?  Because the work that Billy-Bob did was not under Joe Smith’s Contracting Service, and why in the heck would Joe Smith want to take the liability for work he didn’t even get paid for?  Now the liability is mine and Billy-Bob is out of the picture completely.  That $65 service fee that my regular vendor was going to charge doesn’t seem to be such a large amount of money anymore.

Exceptions are rarely exceptional

The worst part of this scenario is that I made an exception for my client who did not want to use my thoroughly vetted, licensed and insured contractor that I already knew was a safe choice.  That’s the contractor that I use confidently, because I have his credentials on file and up-to-date insurance policy.  If anything goes wrong, I can assure my owner and tenant that while unfortunate, the incident was through the use of a qualified, vetted, trusted individual who has insurance to cover “oopsies” and mishaps.  My conscience is clear and we can move forward making it right.

Know who you are sending into your rental

If you are a owner who wants to use your own vendors to perform work in your home, you will want to follow the same guidelines that we do, so that you don’t get caught in a very sticky spot that is easily avoidable (and likely for about the same cost as you are going to spend on your side-deal).

  • Be sure you are using a company that you like and not just because you the technician that came out for your last repair.  That guy may not work there anymore and the company as a whole may not be as great as the guy who gave you good service last time.  Really consider if the benefits of using my trusted professional (who is very much under my control and training) are negated by how very awesome your relationship is with the company that you want to utilize over mine.
  • Be sure your vendor is the right type of technician for the job that you want me to use him for.  You don’t need to send a plumber to fix a broken toilet handle, but you don’t send a plumber for an electrical problem either, just because he’s your friend and you think he’s handy at everything and is going to give you a better price.  We send the right vendor for the job, and we keep your budget in mind as much as you do.  It’s important that things are fixed properly, so that you don’t negate the purpose of your “hook-up” by now having secondary damages or repeated repairs for the same issue that wasn’t fixed the first time around, or an insurance claim because your friend made an honest mistake but was working on the side and isn’t covered.
  • Don’t use anyone for a repair in a tenant-occupied home who either doesn’t have appropriate insurance or you don’t personally know the technician going out to the home.  Maybe your friend who works there is great, but he’s not the one they send out, and they hire freshly released prison offenders through a city program that you didn’t even know existed and which has a 50% failure rate.
  • Don’t use contractors without ensuring that they are not subbing out the work to other contractors.  If a subcontractor is utilized, we must ensure that they are licensed/insured/qualified for the job that they are performing as well.
  • Don’t send out the cheapest vendor that you can find without knowing anything about them.  You may think they are the best option because they are cheapest, but unknown vendors offering lower prices are often are worth every penny.  Many times they quote you the best price to get in the door, but then there are always extra costs coming up, causing you to spend more than you would have with my vendor.    And do you know if this person is a fly-by-night guy who won’t be around when the repair doesn’t last?  No, but I will be?  I have to answer for your vendor.   Meanwhile, the guy that works for me weekly in many of my homes, who has an investment in giving me the best pricing for great work and keeping my owners and tenants happy year-round could have done that repair with his eyes closed.  He’s invested in doing a good job for me so that he keeps my business.  I manage 175 homes right now and I like using good vendors over and over again.  
  • Don’t use someone you don’t know or who isn’t highly recommended to you by someone you trust.  If I’ve referred you to a vendor, that is a very HIGH recommendation because I am a tyrant.  I have to have to answer for that vendor’s work ethic, expertise, and price, so I have to be.  I expect 1st-class service from our vendors, competitive pricing and most importantly – KINDNESS.   I have had owners  ask me to procure an estimate, only to go forward and make 50 phone calls around town to save themselves $25.  We use their chosen vendor, who they are only hiring based on a quoted phone price and no other information.  In many cases, their vendor can’t be easily reached, doesn’t come when scheduled, isn’t friendly to my tenant, dresses like a hobo and reeks of smoke, doesn’t come equipped for the job, has to visit the home multiple times to get the job done, and my absolute favorite, starts nitpicking the system or your house to the tenant who then insists that the vendor told them the equipment wasn’t worth fixing or that what was really needed was a full replacement (which of course, they are happy to do for the right price).  Your tenants then won’t be happy until they get the repair that your vendor (who you don’t know from a can of paint), said was needed.  Now we have a debacle.

If we do use your vendor, there are some stipulations:  

  • We will need a current insurance certificate.  It will need to be revised to be worded as RE/MAX Alliance requires it to read.
  • We will need a W-9 from your vendor.
  • Your vendor will need to be certified/licensed in the field in which they will be working .
  • Your vendor may not use sub-contractors without that sub-contractor going through the same certification process.
  • We will need to know who is going in the home, and they will schedule through our office, not through the owner.
  • We need all of the contact information for the person who will be working in the home.
  • Your vendor will report to you AND to us on the repair performed, parts used, diagnosis, and cost.  Any warranty will need to be in writing.
  • All entry into the home will need to be coordinated for them by US, and they may not enter the home without proper notification being provided to our tenant in accordance with the VRLTA.
  • We must be involved in the work process, planning, findings, repair scope, and scheduling just as we would be with our own vendor.
  • They will not be permitted to report on their findings or repairs to the tenants.  We will pass along information to the tenant as needed to ensure they are comfortable with the repairs.

Mary Kenworthy – PROperty Manager for Stephanie Clark and Team

 

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Posted in Maintenance, Opinion, Property Management Blog
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Stephanie Clark Property Management has been delivering outstanding service to homeowners, investors and tenants in Virginia Beach, Chesapeake and Norfolk since 1995. Whether you own a home that you are not able to sell or you already have investment property but are not satisfied with your current property management company, we can help! You may be tired...
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