Reminding an Old Dog of Old Tricks

This will be a short entry for this week, I promise.  Short or not, I believe it’s a good reminder for all of us in the real estate world about asking the right questions.

Recently, an agent asked me if we did hard-money loans.  “Of course,” was my response.  She gave me a quick sketch of what her client was looking to do and why he was looking for a hard money solution.  For those of you who are playing at home, if you guessed “fix and flip”, you’d be right.  Gold star on your forehead!

She explained that he was being quoted interest rates in the low teens, which is certainly nothing out of the ordinary for a hard-money loan, and she asked if we had something that would be better.  I asked her to give me the evening to look into a couple of things, and I told her that I would call her and her client back the next day.

That same evening, I was lying in bed when an awesome idea came to me.  Unfortunately, no one was around so I had to give myself a high five.  At any rate, I went to bed that night thinking I was the cat’s meow (don’t tell my dog I said that).

The next day, I reach out to the agent and her client with my wonderful plan.  It would be a straightforward 30-year fixed mortgage with interest rates in the mid 5s.  Since this was a fix-and-flip project, the down payment requirement was 20%.  When they heard that the interest rate would be in the mid 5s, the agent and her client danced a little jig (I’m picturing it now), but when they heard 20%, they stopped and asked if there was anything we could do to take that down to 10%.

My mind started buzzing to see what possibilities existed, and as I was coming up with a couple of things, the agent said, “That’s great!  Can we close on (insert a date in the V ERY NEAR future)?”  I was about to launch into an explanation of the process involved with this type of loan and how some of the factors, time wise, are out of our control, etc., and that will make closing in that short of a period of time doubtful.  I stopped myself and asked, “Is that date the lynchpin in all of this?”  They both confirmed that it was, and we began discussing other hard-money options.

In the end, everything was fine, but this exchange reminded me of one of the most fundamental truths in business: ask the right question so you can give the right answer; don’t ask questions to match the answer you think they need.  Lesson learned (or re-learned).

mortgage, prioritylending, realestate, simplicity

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