Sales experts know that in order to make a sale, they must identify the client’s problems and provide the solution. Financing continues to be a barrier to growth in the remodeling industry—and it may be a solution remodelers can help with in order to make the sale. Remodeler opinions vary when it comes to whether it is part of their job to ensure clients have financing for projects yet, in today’s economic climate, it might get you clients who otherwise would have put the project on hold.
The case for providing financing
Craig Guido, project developer at Almar Building & Remodeling Co., based in Hanover, Mass., started to provide financing to clients two years ago.
“I think in the past, people were financing projects out of the equity of their homes,” Guido says. “But by 2008 to 2009, I started to notice that people were asking me about financing during sales calls.”
Guido partnered with Service Financial LLC, a loan provider, as a way to offer financing to clients. The Internet-based company allows Guido the freedom to have clients apply for a loan right on the spot from an iPhone or tablet.
“Loans up to $7,500 are unsecured, so no closing costs, and anything above that, up to $35,000 is secured loan,” Guido says. The interest rates are based on a client’s credit score but range from 9.5 percent to 13 percent. Secured loans are reserved for higher priced jobs because they are backed by an asset, most likely the mortgage of the home and unsecured loans are not backed whatsoever.
It doesn’t cost Guido anything to provide this option to clients, but he also doesn’t collect anything for projects financed through the company. The projects financed under Service Financial require Guido to cover a portion of costs for a period of time, with final payments made 2 weeks to a month after the project is complete.
Guido has found that every client is different, and many who have good credit usually have access to loans at lower interest rates. “Many times it’s a starting point, where I see what I can get them, and they use that information to compare with their own rates from mortgage brokers or banks. Sometimes we explore 203(k) loans on a refinanced home.”
In Guido’s experience, many clients don’t understand how financing works or don’t even know what their credit score is, and the financing program is a good way to help them figure this out.
By looking into every financing avenue available, Guido believes clients feel more reassured about making the right investment.
Guido estimates a dozen or so clients have applied for financing through Almar, and most who take advantage of the financing have smaller projects like bathrooms or window replacements.
For example, one client was in need of $8,000 worth of postponed repair work and could only cover a portion of the cost. In this instance, Guido’s ability to finance the balance was crucial to getting the project off the ground.
The fact that Guido is willing to help them find the right financing solution to get their projects done adds to his character and goodwill as a remodeler—even if they don’t end up financing through him. “My goal is to make my clients happy with their remodeling project and not have to take on more burden ,” Guido says. —Morgan Zenner