Have you ever worked hard, spending hours arranging financing for a potential client, and come to find out it was all for naught because you did not execute a fee agreement, and the client went to another lender?
I understand this is the nature of the business; however, there are ways to improve your probability of retaining clients through the close of escrow.
A broker’s constant challenge is to get control of the client early, so you don’t lose the financing opportunity. Unfortunately, I know we lose clients more often than we would like. How do you keep this from happening? There is no easy solution to this problem, but I can give you some guidelines to position yourself to retain more clients than you lose, which will result in you being more productive, efficient, and profitable.
How do you improve your chances of retaining your client and closing the deal:
- Establish a solid client relationship
- Add value to your client’s transaction
- Take a long term approach to every client transaction
Establish a solid client relationship
Establishing a client relationship takes a great deal of energy and effort, like getting a plane off the ground, but you can relax and enjoy the flight once it’s flying. You need to spend time, effort, and energy to obtain and maintain a great client relationship.
You can do this by going into your client’s world and asking a lot of questions. This is much like any relationship. A few examples of questions to ask are:
- How did you get involved in developing real estate?
- Where did you learn the business?
- Why do you like investing in real estate?
- What other businesses do you own?
- What other projects do you have?
- Why have you specialized in this certain product type?
- What hobbies do you enjoy, and where do you like to vacation?
Clients love to talk about what they do and are usually passionate about sharing it with someone who cares. Putting your client’s interests first, generates a personal connection that will be the cornerstone for building the relationship and executing the transaction, which will result in repeat business and lasting friendships.
Add Value to Your Client’s Transaction
The more information you can provide your clients, the better. Withholding information from a client because you don’t have an executed fee agreement is foolish thinking. Instead, give as much information as you can to help them get a loan, even without a fee agreement. This will generate a form of loyalty that will help you retain the client moving forward. If your clients need to know something, they will find it in today’s world, so why not provide it first.
Your website is a great place to keep a lot of information available for clients. For example, forms, templates, business links, marketing analysis, property information and any related business information would be of interest to the client. Here are a few examples you can do to add value to your client’s transaction:
- Provide a loan quote for the transaction
- Analyze the value of the property
- Generate a feasibility analysis and proforma
- Provide referrals for the client to satisfy other needs, i.e, construction costs, entitlement and engineering issues, etc.
- Provide sale comparables for property value comparison
Adding value to your client’s transaction will increase your chances of influencing the financing opportunity and ultimately executing the deal.
Take a long term approach to every client’s transaction
Don’t let a few lost deals by dishonest clients discourage you from giving a potential client the benefit of the doubt. For example, suppose you’re defensive at the start of a relationship because clients have burned you in the past, and you insist on a fee agreement before you begin. In this case, this attitude will result in an uphill battle to gain the client’s trust and confidence to move forward with the transaction.
It’s important to show that your client’s relationship is more important than closing the deal. Sometimes this means taking less of a fee. Believing your client initially with a trusting attitude improves your odds of establishing a solid relationship that may turn into a long-term friendship resulting in more closed deals.
In part-2, I will share the value in the brokerage fee agreement and when is the best time to request a fee agreement be executed.