These days it’s all about data. We have been approached by some reserve study software companies that wanted to “partner” with us. They’d offer us “free” software, and we offer them access to our customers data… What did they want to do with the data in a reserve study? Well, they wanted to sell it to Vendors who will pay a significant amount to know when and who to target with the marketing efforts when it comes to large projects.
Example: A community that has several buildings and projected roofing project estimated to occur in the several years may be looking at a roofing project(s) in the hundreds of thousands of dollar range. This would be excellent information for the software company to sell and the Vendor to buy. Unfortunately, it is the community which gets the short end of the stick in this scenario. Rinse and repeat a few thousand times and the data ends up being quite a profitable business – so is this company in the software business or marketing business, I would say the latter and who is their real customer you or the vendors they are selling this data to, I would also say the latter.
We also have seen a higher tick in partnerships between reserve study companies and Vendors. These partnerships have mostly been justified by stating that this helps the reserve study company get more accurate overall numbers in a reserve study, and to some degree I think this is true. However, all good, fabrications and bending of reality is based on some level of truth.
We are constantly being approached by Vendors who want to “work with us” hoping to get a foot in the door to a meeting or introduction. If it works out, they frequently state we would earn a commission for this effort (one company offered me personally $10,000 for each introduction and closing of a project with them). These are often projects that cost hundreds of thousands or millions of dollars and there are often big commissions attached to them. Some Vendors, such as lenders and insurance providers, will use the data to their benefit in the way of higher insurance premiums if they can justify a reason for raising the risk associated with covering your community.
Other Vendors, such as lenders and insurance providers, will use the data to their benefit in the way of higher insurance premiums or higher interest rates if they can justify a reason for raising the risk level associated with covering/lending to your community. Having an “inside” edge helps them make more profitable decisions as compared to other companies which do not have this edge. Is this fair? I don’t know, but I know that community boards are for the most part not aware of this occurring in the reserve study industry, and by reserve professionals which they have assumed are independent and unbiased.
The flip side of the argument is that reserve study companies/vendors involved in these schemes will say things like "you could get lower rates/premiums" and that may very well be true (if you follow all their protocol) but in my opinion that should be using their own employees not a reserve study professional's which was hired to be independent and at the very least these reserve stuidy companies should be putting in their contracts that your data is being shared.
For a variety of factors keeping your data private is in your best interest; independent advice and more competitive estimates/bids are two of the big ones (I’ll tackle this topic another time). How your data is being stored, who will have access to it, and who is the company you are working with is an important part of the overall decisions of what reserve study company to use and what reserve study software to use.
