Commercial Brokers International - Commercial Real Estate in Los Angeles

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"D.A.M." Your Clients

DO YOUR CLIENTS HAVE THE DESIRE, ABILITY, AND MOTIVATION TO INVEST?

Save yourself time and energy by qualifying all of your clients.

Not everyone is ready to make an investment in commercial real estate right away.   Sometimes a person will have the means to invest, but they may not be at a point in their life where it’s in their best interest to invest.  Or they may just not have the motivation to invest in commercial real estate if there are other more lucrative alternative investments available such as the stock market or business opportunities.  If an investor is going to close the deal with you, it’s going to be because they have the desire to invest, the ability to invest, and the motivation to follow through on those wants and needs.  

Desire

This one is pretty easy as almost everyone wants to own real estate.  As an agent though, you will need to qualify under what parameters your client will be willing to actually purchase a property.  How excited is this investor about making this deal?  Have they invested before?  If you have a client that calls in from your website or through a referral they probably already have a strong interest in investing.  But if you searched and called the potential client yourself, then that can be a potentially different story.  They might have all of the money to invest in the world, but they might lack the desire to invest because they’re already retiring, or they prefer stocks and bonds to real estate, etc.  A mildly interested client is worth follow ups, but at some point you’ll have to decide if their desire to invest their hard earned money is realistic given the current market conditions It’s important to directly inquire into your client’s wants and needs and then to deliver on them.  If your client doesn’t possess many wants and needs, then they’re not very likely to become a converted lead.   

Ability

Even more important than desire, is the ability to perform.  Most people have the desire to invest in real estate, especially when they’re just starting to look at investments.  Either because they’re curious or looking to build up assets over time, but they might not have the capital to actually make those investments.  Many new agents have fallen into this time trap by searching for the right property for their client and beginning to negotiate the sale only to find out that their client either doesn’t have enough funds to purchase, or that those funds are tied up, or that they don’t qualify for a loan.  Hopefully as an agent you have multiple clients that you’re working with to protect yourself from these potential time wasters, but there’s a way to ensure this mistake doesn’t happen to you at all.

Agents should always ask for proof of funds early on when working with their clients.  If clients are not able, or unwilling to provide this, then they probably don’t have the funds readily available, and  it may be time to move on to a better qualified client.  If they come back to you months down the line with the money to invest, that’s great news, and you should set to work on the deal right away, but until they have the ability to make such an investment, you’re wasting each other’s valuable time.    

Motivation

There are dreamers and there are doers, and you’re hoping that your client is a doer.  You can have a client that has the desire to make investments, has the ability to invest, but just isn’t active enough in working with you to find the property and make the final purchase.  It is up to the agent to qualify the client’s motivation.  Are they looking for additional investments for their portfolio, are they in a 1031 exchange, do they want a tax shelter, or are they looking to diversify their portfolio, do they want a passive investment, or will they take an active role in the management?  All of these are questions you as the agent should know the answer to so you can better understand your client’s motivation and needs regarding a purchase.   A client with a lack of motivation to work with you to close the deal can greatly extend the amount of time it takes to be done.  Some deals also can be time sensitive, reducing the likelihood that you can close the deal at all.  This one you will simply have to get a feel for.

Conclusion

The simplest remedy to all of these potential problems is to have multiple clients you have qualified and deals that you’re trying to close and ideally at different stages in the process.  This way you will always have new leads developing while you’re closing some and others still that are extended in the time it takes to close.  Stay in constant communication with your clients so that you can determine their levels of desire ability, and motivation to invest.  If the client is lacking in any of these areas, it’s time to respond accordingly and focus your energies on other clients that are ready to invest on all levels.