I had breakfast today with a colleague who is in the commercial industrial sales/leasing market and we were talking about that moment he has with clients when they do a gut check about financing. He gave me some examples of clients that take months to consider a real estate transaction only to get to a point where then have to answer questions like:
– am I prepared to provide a personal guarantee?
– is the bank going to want to look at all of my financial details?
– why does a bank want to see three (3) years of financial statements
This is what he referred to as a “pinch point” that can cost him deals as clients will back out of a transaction because they feel uneasy about the financing hurdle.
We talked through the process and I suggested to him that he should be asking the question “can you afford it” before he lets a client get too far down the road. He argued that asking a question like that too early in the process could cost him an opportunity. I argued not asking the question ends up costing him the opportunity.
He said that clients are not sure how to get prepared before talking with him. Banks and lenders want so much information and brokers, specialists, etc. seem to have too many hoops to jump through that clients can get discouraged too early so he tries to work on a transaction with them in hopes that they connect with the deal and then can work through the money part later.
I let him know that this past summer we launched a tool for our clients that he may want to consider. Our online tool (found here) was designed with the idea that someone could get answers about what they can do without talking to a bank, lender, broker, etc.
I left our breakfast this morning reminded that borrowing money is a big task for most people and businesses. My advice: get prepared before you talk with someone about a mortgage or loan and if you deal with clients that need a mortgage or loan give them the same advice.