Benefits of Hiring an HOA Collection Agency
Being an HOA board member is not a piece of cake. From maintaining amenities to keeping peace in your community, it can all seem a bit overbearing at times. Probably the greatest challenge facing any HOA board member is making sure every homeowner pays their dues timely – or that they’re paid at all.
This affects your association’s finances, reserves planning, essential maintenance, and overall community well-being. All of which gets impacted by delayed or ignored payment of dues. Because these can be such painful issues, many HOA boards look to professional HOA collection agencies for help.
Below are some of the advantages of hiring an HOA collection agency, and reasons why this may make all the difference in the world for your community association.
Understanding the Role of an HOA Collection Agency
HOA collection agencies are agencies that specialize in collecting unpaid HOA dues. As opposed to general debt collectors, HOA-specific agencies know how to handle the special challenges in community associations. They provide the best services to match an HOA’s needs, specifically relative to efficient and respectful collection of dues. Before selecting a partner, it’s essential to know what questions to ask before hiring an HOA collection agency, and how to understand different collection agency’s fees and services.
By outsourcing this work to a seasoned HOA collection agency, board members can take the burden of dealing with delinquent assessments off their shoulders, and focus more on maintaining other responsibilities in their community.
- Collections Expertise
Qualified experience is imperative when it comes to selecting an HOA collection service. A reputable collection agency knows how to balance their debt collection process with the needs of your community’s relationships, so as to preserve the social fabric of your association. The best HOA collection agencies handle sensitive situations respectfully, and with tact and professionalism. They know how to encourage homeowners to pay past dues without spoiling neighborly relations.
From friendly follow-ups to communicating personal consequences (such as credit reporting delinquent dues) these agencies perform every aspect of their service with professionalism and efficiency; a very effective combination.
- Harmony within the community
Some of the ill side-effects of having board members directly collect dues from neighbors include awkward encounters, unprovoked tensions, and even disputes or altercations. By outsourcing collection to a competent agency, HOA boards can remove themselves from these sensitive situations. Letting professionals conduct the collections aspect helps ensure all interactions remain courteous and solution-oriented, while the process of alleviating delinquencies is ongoing.
This dynamic puts an agency as the enforcer and the board as the problem-solvers, maintaining an affable dialogue between board members and negligent homeowners. Implementing such an approach ensures dues are collected without harming delicate relationships.
- Efficiency in Dues Collection Improvement
Managing delinquent accounts can be overwhelming for HOA board members, unaccustomed to such tasks. Tracking down homeowners, sending notices, and following up on unpaid dues consumes valuable time and energy (especially emotionally). A professional HOA collection agency is proficient in such matters, and applies tried-and-true methods, such as:
Skip Tracing: Getting the most accurate contact information for homeowners (including phone numbers); even when the property owner is out-of-state.
Custom Letters: Sending professional letters that communicate a progressive sense of urgency, along with an effective consequence for non-payment, motivates homeowners to get current on past due assessments.
Follow-up Calls: Courteous yet resolute calls reminding members of the consequences of not paying their accounts are most effective.
Credit Reporting: Using a time-tested, successful inducement like credit reporting is an effective incentive for securing payment of back dues.
These aspects save time and dramatically improve the collection success rate.
- Affordable Solutions
HOA boards are often concerned about the costs associated with hiring a collection service. Most agencies operate on a contingency basis, where their employee collectors get paid on ‘bonuses’ that are based on how much they squeeze out of homeowners. This old-school method places strong pressure on grinding measures to maximize collections; often at the expense of straining relationships with your homeowners.
Agencies who do their collecting based on a flat fee are much less expensive, and have salaried employees; nearly eliminating all the undue stress associated with those older methods. In this simpler model, there’s just a single fee, per account submitted, which can legally be tacked on to a delinquent homeowner’s balance. This way, the HOA receives all of their collected dues, by including each small individual collection fee in with each associated homeowner’s delinquent balance.
- Regulations Compliance
Debt collection laws require expertise to properly adhere to them. Professional HOA collection agencies know these laws inside and out, adhere to all state and federal regulations, and are experts at upholding all FDCPA and CFPB and HOA related rules, regulations, laws, and statutes.
All such agencies carry proper insurance coverages, and retain their own legal resources, giving HOAs and their board members an additional layer of security and peace of mind.
- Flexibility Through Payment Plans
Professional collection agencies request that their HOA’s boards establish payment plans or arrangements the board deems appropriate, to best facilitate the needs of their community and its homeowners. This helps ensure all members are treated respectfully, and that the board uniformly upholds its fiduciary responsibilities to its members. The agency serves as a partner in carrying out these rules established by the board regarding both repayment of delinquencies and member relations.
- Preserving HOA Resources
The reality is, that internal attempts to collect delinquent dues divert valuable resources, especially in time, that are better spent by the board on other activities such as maintenance, reserve planning, or community events. HOAs are better off outsourcing collections to a professional agency, so the board can focus on other primary functions without the stress associated with approaching members who are out of compliance on assessments.
- Keeping the Process under Control
Some boards fear a loss of control may result when engaging a collection agency. However, well-qualified agencies operate as partners with the board, reporting on progress and securing board approval on how to best handle homeowner interactions. That way, the HOA retains its oversight, supervision, and control over the entire collection process.
- Avoiding Foreclosure
Foreclosure should always be the absolute last option as a means to collect dues. It’s expensive, highly time-consuming, and so abrasive (even abusive) for relationships within a community. Property values can easily be damaged as well. Agencies utilizing reasonable, yet effective options, such as clear and direct communication, credit reporting, payment plans, and instructing members to pay their association (or its agent) directly, can recover dues in arrears with greater ease and far less exposure than extreme measures like foreclosure.
- Protecting the HOA’s Financial Well-being
Unpaid dues have a snowball effect, inviting other members to stop paying assessments. Such stress on association finances often results in deferred maintenance, reduction in amenities, and drained budgets. Partnering with a collection agency helps HOAs recover funds in a timely manner and maintain financial stability.
- Improvement in Member Satisfaction
HOAs send a clear message to their community’s members when collecting dues in a professional manner. Members actually view the board more favorably (especially those who pay regularly) when other members catch up on their late assessments. Respect for the board is an essential element in a healthy HOA. And few things garner respect more than neighbors seeing your community blossom and flourish.
Final Thoughts
The advantages of utilizing a professional HOA collection agency far exceed simply recovering delinquencies. It helps protect your community, maintains harmony, improves the HOA’s financial health, and gains much-needed support for boards in carrying out their important responsibilities.
With the help of a reputable collection agency, your HOA will easily overcome difficulties with delinquent accounts receivables, and enjoy a healthy, flourishing environment for all members. Whether you have only a few delinquencies, or a development-wide problem facing your board, one qualified agency will make all the difference for your association’s future.