The Art of Listening
Hearing what your client is really saying during the application stage is crucial to funding
By Andrew Bogdanoff, president, Remington Financial Group
For commercial mortgage
brokers, listening is a vital skill.
When considering a business deal,
brokers should interview their clients directly during the application process.
In this phase, listening carefully is important while gathering information about
what a client has done in the past to secure
funding for a particular deal.
Listening to answers about past efforts
to secure funding is important for two reasons. First, brokers can use this information
to determine the best loan type to secure.
Second, clients may not be completely honest when answering this question.
Because the first information borrowers provide might only be brushstrokes of
the real answer, brokers must be on their
toes to spot any discrepancies.
The fact that borrowers are talking to a
broker may be a clue that they have tried
other routes to secure funding for their
commercial deals. It makes sense for a client to first visit a banking partner to fund
a new business deal. Why would clients
be willing to pay a brokerage fee if they
haven’t explored fee-free options?
By really listening to clients’ answers,
brokers can start piecing together the pre-vious-attempts-at-funding puzzle.
Brokers should consider that the information borrowers initially provided about
funding efforts have been embellished.
Good brokers rely on a combination of
what they hear and what their gut tells
Andrew Bogdanoff has more than 35 years’ commercial lending experience and
founded Remington Financial Group in 1993. He has served as the company’s
president since its inception, and under his leadership, the company has grown
to a closed-transaction rate of well in excess of $5 billion. Reach Bogdanoff at
firstname.lastname@example.org. For more information on Remington Financial Group,
them to determine when clients are telling
the truth. Brokers should push for more
data if they feel that accurate information
is not being provided.
One way to approach borrowers is
to ask them what about the deal would
make a lender reluctant to provide financing. Because there are downsides to every
deal, borrowers should be able to provide
some thoughts. If they cannot, continue
to ask questions.
For example, ask them how much experience they have with similar projects. If they
have limited or no experience, it could be a
red flag that they have been turned down for
funding based on a lack of expertise.
Brokers can read between the lines to root
out additional information that borrowers
might not share directly.
For instance, the type of deal being presented is a means to access additional information. If the deal is a refinance of an
existing project, ask if there is a current
loan on the property and what its status
is. Answers to these questions will help a
broker determine why the borrower is not
asking for funds from the existing lender,
or if the loan is delinquent.
New projects leave the door open for
brokers to discover vast amounts of information. For example, if the borrower is
requesting funds to build a new housing
development, the broker might want to ask
if comparable homes in the area are selling well or if there are unsold units. The
answers to these questions can determine
the viability of the concept.
The broker also should discuss the borrower’s credit history. Ask if the borrower
has ever had any litigation, bankruptcy or
foreclosures, and encourage the client to
share this information openly and truthfully. If one of these things has occurred,
there might be explanations that would allow a deal to still proceed.
Feeling comfortable that a client is being
honest about past attempts to secure funding is critically important. Many clients
don’t realize that small cover-ups will come
out during the underwriting process or that
a less-than-truthful answer can complicate
the deal or even deem it invalid.
Brokers should listen carefully to a client’s answers and be at ease asking further
questions. By doing these things, commercial brokers can determine if their clients’
deals make sense.
by Andrew Bogdanoff
“In Search of Internet Prospects,”
“How to Find Creative Funding Options,”
“Looking Before You Leap,” July 2008
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