S.E.C. Real Estate Observer

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Editor’s Note: This article first appeared in the December 1972 issue of the R.E. News Observer. It may soon be time to sharpen your skills in this area due to the changing real estate market.

All real estate transactions involve some sort of financing. It is in this arena that most doomed transactions fall.

Given good structure and a fair amount of client motivation, only satisfactory financing remains, and the whole bag will close in escrow.

In my “Creative Financing in Real Estate Seminars,” there is always “break” talk about financing problems, present or past. And always, during the class, I see faces “light up” when they recognize a financing technique that would have worked.

Once you learn Creative Financing techniques, you will be able to use this problem-solving method when you face a problem in financing:

1. Define the problem. Make sure it encompasses all aspects of the problem.

2. Determine the Creative Financing technique or combination that looks as though it will solve the problem on the surface, irrespective of client motivations.

3. Insert the client motives, one by one, into the problem solution. This will generally cause some techniques to be thrown out, but, it also will strengthen others.

4. Now, use variations available on each technique until you have one you feel is the best. You may choose the second or third variation.

5. At this point you have probably run through ten methods, discarded them, and discovered that variations have sprouted. You have reached a joint meeting between the problems, motives, and objectives of the parties involved.

I am amazed at the number of licensees who stop learning financing techniques after FHA, VA, and conventional savings and loan situations. It is difficult to solve clients’ real estate problems if you are limited to three or four conventional financing methods. Of course, you could limit yourself to handling only these types of problems.

But is that what you want to do?

There are always times when client motives change. You need to be flexible enough to understand this and bend your financing plans to meet these changes. After all, your purpose in brokerage is to solve people’s real estate problems to their satisfaction.

The second real purpose is to get, or keep, them in a “real world” atmosphere that allows them to have their problem solved.

Many prospective clients tell me they don’t have a problem. Some even resent the suggestion. I ask them why they are in my office if it isn’t for me to do something that they can’t do for themselves-or don’t wish to do for themselves. In most cases, we agree that their circumstances have motivated them to come to me for a solution to a situation, which, if left unchecked, would soon be a real problem.