Why is it so Hard to Ask Financial Questions?

When moderating new attendees at our national marketing sessions and teaching classes, I see client financial details listed as “unknown” by a huge amount of our attendees. I remember when I regularly failed to ask for this also.

As a young broker, I worked hard to gain listings. In one instance I landed two large land listings owned by one of the “richest men” in Omaha. I was so excited!

I attended a regional marketing session and presented my new listings. The crusty moderator asked me if I had seen my client’s financial statement. Was I sure that he really had any equity or was this basically owned by the bank? I had the impression my client was selling to pay down some debt, but I didn’t know how much was desired or needed. This moderator more or less called me an idiot for not having his financials and suggested that my time and my client’s might be wasted. It was a great learning moment.

As a young broker, I also assumed that I couldn’t get that information and wasn’t “entitled” to ask for it. In this case, I worked for about six more months getting nowhere. So at my listing-extension meeting I asked for my client’s financials. I told him that so far I hadn’t found any cash buyers so maybe if I had a clearer picture of his holdings I could see some exchange options. I was surprised that he didn’t hesitate to give me a copy, and I probably could have received all of this info six months earlier.

What I learned was striking. A closer description of my client was that maybe he was the “Brokest Man” in Omaha. He was so underwater it was amazing. We’re talking in the millions of dollars. I had totally wasted his time and my time due to a lack of knowledge of this key fact. He didn’t need a real estate broker; he needed a Chapter 11 attorney.

Today I still see many commercial brokers that are so “property oriented” they forget to counsel extensively to understand fully their client’s situation. Why is this? I have a few theories.

  • Brokers have been indoctrinated to “go get the listing.” They operate on the old salesmen’s theory, whereby the prospect is willing to sign, shut up and point to the signature space. However, in their haste brokers fail to ask all of the questions necessary to find a transaction.
  • Brokers lack confidence. We still have some sort of inferiority complex that we aren’t to be trusted with personal financial information. But why should a client trust you with a listing on their property if they can’t trust you with their total financial picture? With all of the training that commercial brokers go through in CCIM, ALC, SIOR and SEC classes, why not elevate our status to that of their CPA or attorney who knows this info? Our only responsibility is to respect confidentiality and share only what is approved by the client. This isn’t new; in counseling some of what we learn is always confidential.
  • Brokers still don’t realize what doors it opens for transactions with good financial information. For example, you have a land listing that isn’t today land. Wouldn’t it be helpful to know that your client is wealthy and owns lots of other free and clear property? Then you know he can free and clear this land and exchange or pledge it for a building he can fix and make a profit from. Maybe he is more of a “buyer” with excess equities, than a “seller” of land.

No matter what formula or idea, it takes all the right information to increase chances for any potential transaction. Financial information confirms stated needs, motivations, capabilities and intent. It increases your ability to succeed on behalf of your client and improves the chance that this success happens quickly.

If you don’t obtain all necessary information, including detailed financials, at the listing appointment, then schedule a new counseling session as soon as possible—you will surely improve your success ratio!

Steve England

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