Hiring a vendor without criminal record background checks, insurance, or financial backing can result in poor work and lost money. These risks become prevalent during late-night/early-morning disasters, when a new contractor is hired because a preferred, long-standing vendor cannot be reached. Daily in property management, new vendor relationships are created. But the problem remains that many of these newly hired vendors are not properly screened, and sometimes don’t live up to satisfactory expectations.
Furthermore, some vendors may refuse to take responsibility for poor work or created damage, and the management company may be suddenly thrusted into a bind. But comprehensive vendor screening can help property managers avoid being left with the aftermath of poor vendor performance. Once vendor relationships form, they tend to be put on cruise control and not reviewed nearly as often as they should be, if at all. Due to this comfortability, communication usually falls through the cracks down the road.
The benefits of vendor screening can lead to a significant difference for property owners. Property management companies can differentiate themselves from competitors through vendor screening because prospective property owners are more likely to go with a company that does its due diligence when it comes to vendor selection. On top of that, the risk of using a company that doesn’t screen is eliminated, which protects owners as well as the property management company itself. Also, creating a network of qualified vendors establishes expanded resources for company usage.
Another point to make is that vendor networks can always be maintained and up-to-date. This is more important than you may initially think. In a competitive job market, companies run a higher risk of losing key contributors. If and when they leave vendor relationships can soon follow them out the door. The right vendor screening process should include but not be limited to: thorough vendor agreements, insurance confirmation, background checks, proper licensing and verified W-9s.
Insurance verification especially, is important to both vendors and property management companies. Some insurance policies may appear to cover the entirety of a property, however there may be hidden language in the policy that specifies otherwise. The last thing you want is an insurance snafu as a result of lack of diligence while reading over insurance policies. At the end of the day, proper vendor screening can provide both property owners and property management companies alike with an abundance of information needed to make the right decision. Once you establish a stable vendor network, it will only help you reduce vacancies and extend stay periods.