If you’ve been with your real estate tax monitoring vendor for years, contract renewals may seem almost like a formality. However, your institution can greatly benefit from evaluating your current experience and exploring other options—before you sign the renewal. This blog will explore the importance of due diligence at contract renewal, in addition to recommendations for evaluating your current vendor relationship.
The importance of due diligence
Your institution did its due diligence when you hired your current vendor, ensuring the vendor was trustworthy and the contract fit your needs. For the same reason, it’s wise to conduct some due diligence before signing a contract renewal, to ensure your institution is spending its money as judiciously as possible.
Perhaps the relationship seems fine on the surface, but there are issues you’ll uncover upon investigation. Even if you determine you’re satisfied with your vendor, you’ll have documentation that you’ve done due diligence before re-committing to the contract.
On the other hand, some contract renewals include red flags from the start. If you’ve been given a large price increase, reduction in services or other unhappy surprises, then it’s definitely time to evaluate alternative options and see if there’s a better fit for you on the market.
Consider the vendor
Take a step back and think about your vendor. Consider areas such as the following:
How has the vendor changed or evolved since you’ve worked with them? For example, have their service offerings improved? Have they enhanced their products or provided additional offerings? Or, on the other hand, is service or quality declining?
If you’ve been presented with a contract renewal, are you facing a significant price increase? If so, has the vendor done anything to warrant that price increase, such as increasing service offerings or enhancing existing products? What, if any, is their justification for the price increase?
Do you feel you’re getting the best value? For instance, do they charge extra for basic customer service, when you could get free service elsewhere?
Consider your experience
It’s also smart to examine your experience with your vendor. Talk to staff who are using the services regularly or interacting with the vendor, and ask questions such as:
How are your internal processes impacted by the vendor? Do they make work easier or add complexity for your staff?
How is the relationship with their customer service representatives? Are interactions usually positive or negative? What is their response time when submitting questions or concerns?
Are there concerns that should be addressed but have become “the way things are”? For example, are internal teams doing workarounds or catching errors from the vendor’s work?
Have there been any problems with your borrowers, such as unnecessary fees, mix-ups or errors?
If you haven’t evaluated alternative vendors in a few years, the best course for your institution is to complete due diligence on the options available—before resigning your contract. Maybe another vendor has surpassed yours in service or solutions. Or perhaps there is another vendor that will better fit your current needs.
Not sure if you need to fire your vendor? Check out this checklist for even more signs that it’s time to switch vendors.