According to Bob Weickgenannt, president of Starcom Design/ Build in Columbia, Md., “Ifyou want to give your customers the best service, you'vegot to have all the cards.” And, in the competitive remodeling market, yourtrump card may very well be your ability to offer financing.

Remodelers who offer financing use various sources. An increasing number aresigning up with large banks or finance companies such as Wells Fargo, KeyBank, CapitalOne, andGE Money. Some also use alternate sources for customerswith difficult credit.

Regardless of the source they use, all say that the availability of financinghelps them sell more jobs for more money — in part, because they offercustomers relatively quick gratification. “This is a highly competitivebusiness. The longer it takes to get approval, the more likely it isthat the client is going to shop around with other lenders,” accordingto Julie Joseforsky, president of KeyBank Mortgage. “There is some [urgency] toclose quickly.” The remodeler can usually callin an application and get pre-approval in as little as a few minutes, andthe money can be secured within 24 hours. That can keep a lot of buyers fromslipping through your fingers.

Remodelers with experience offering financing are so sold on its value thatthey tend to trumpet it in their marketing materials, as well as on their Websites. “We don't want money to be a stumbling block, so we mentionthe availability of financing in all our customer communications,” saysJohn Murphy, president of Murphy Brothers Designers and Remodelers in Minneapolis. “We'veheard from some customers that it's one of the reasonsthat they decided to call us.”

Presentation Anxiety But despite its obvious appeal, some salespeople balk at bringing up the subject. “Justbecause you have a [financing] program in place, doesn'tmean your salespeople will be eager to present it,” says MarkRichardson, president of Case Handyman Services in Bethesda, Md., whichuses a combination of large finance companies and local banks. “Manyaren't comfortable in this arena even after going through training.”

Teaching salespeople how financing will help their bottom line should breakdown much of their resistance, but you may also have to show them that theprocess of selling it is relatively painless. Richardson, whose sales staffcomes mainly from a design or construction background, says some worry thatthe customer will know a lot more about the subject than they do. The truthis that they might, but it doesn't matter. The salesperson need not be anexpert on financing any more than he is an expert on plumbing; he just hasto present what the company offers. However, contractors should make surethat the lenders they work with will field calls directly from homeownerswho have technical questions about loan terms, interest rates, and other issues.

Having said this, remodelers and finance companies both suggest that salespeopleshould have a basic familiarity with the various aspects of project financing. “Irecommend that [new salespeople] spend six hourslearning about things like appraisals, interest rates, and construction draws. Theyshould also be familiar with [real estate] comps in theirarea,” says Weickgenannt, who works with a local bank as well asa mortgage broker.

One advantage of dealing with a big finance company is that it may offer bettertraining resources. Dave Anderson, regional sales manager for GE Money'ssales finance unit, says he typically spends two to four hours on initialtraining and can make himself available for ongoing support.

Sales Basics There's no reason that integrating finance into your sales pitch shouldn't berelatively seamless. Weickgenannt talks to a prospect for 10 to 15 minutesto make sure they're a good match for his company, and then immediately introducesthe financing option. “I ask how they want to pay. If they'relooking into financing, I'll give them our options.”

In fact, remodelers and lenders alike recommend presenting financing as an optionto everyone and quoting a monthly payment along with the job price. “Oftena salesperson will assume that [an affluent] homeownercan just write a check to pay for the project,” Anderson says. Buthe adds that there's a difference between the ability to write the check and the desire. “Most people are payment buyers. More often than not, [the homeowners] willspend more money if they can make low monthly payments ratherthan taking the money out of their investments.”

He also tells salespeople to approach the subject in a matter-of-fact way. “Believingthat a customer will be reluctant to discuss finances is 80% perceivedon the part of the remodeler. Someone buying a TV at an electronicsstore doesn't flinch at giving household income.” If they do, somebig lenders, such as GE Money, will put a link to an online applicationon the contractor's Web site, allowing the customer to fill out and submitat their leisure.

Once a homeowner has expressed interest in pursuing one of your financing sources, thenext step is matching the borrower to the lender. Asking them afew questions about their credit history — such as their credit score, andif they have been denied a loan or filed for bankruptcy in the last fewyears — should tell you whether to send them to a first-tier lenderor to an alternate source (see “Backup Bucks,” page S78). “Toavoid frustration, we want to make sure the first person we introducethem to is the one who can come through with the financing,” says Murphy, whoselenders include US Mortgage, First Trust Mortgage, and CentennialMortgage. “We ask questions to decide how they're positioned andwhich lender they should be working with.”

While it's important to let buyers know they can get quick approval, it's nota good idea to pressure them. Most full-service remodelers — who dealwith relatively large sums of money, may be in the clients' home for a considerablelength of time, and depend on referrals and repeat business — adjusttheir pace to that of the client. Allyn Harth of Harth Builders, SpringHouse, Pa., whose primary financing source is GE Money, says, “Duringthe first meeting when we're talking about probable costs, we willask if they have financing available. But we don't expect a quick decision. Wesoft sell it.”

What Not to Do When presenting a finance package to a client, what you don't say is as importantas what you do say. Here are a few pieces of advice:

  • Don't claim to be a financial expert.Instead make clear that you're only acting as a referral source. If there areany legal issues later on, you could be held to a higher standard than anothercontractor might.
  • Don't make any guarantees about payments or loan structure.
  • Don't quote an interest rate. Just say that rates are competitive.
  • Don't lowball a monthly payment.If it turns out that the real payment should be higher than that quoted by thesalesperson, the company has either to take a loss or risk alienating thecustomer. If the customer insists on a ballpark number, estimate on the highside.