Look 'em in the Eye and say, "Are You Going to Pay Me Back?"

By
Real Estate Agent with Bill Cherry, Realtor 0124242

 

 

 

 

When I began working in banks, it was by accident.  It was 1960 and  I was a sophomore in college, home for the summer, and looking for a summer job.

 

One of my daddy's friends was the president of a local Galveston bank, and he hired me.

 

A couple of times he and I had coffee together, just the two of us.  One time he told me how to loan money.  I'm going to share it with you.

 

Here's how to make a loan:  Have the guy fill out all of the paper work and bring in all of the exhibits the bank examiners are going to want to see. 

 

Next, personally go look at the collateral that will back the loan. 

 

Then do your own credit work up on him to make sure that he will not have to strain to make his monthly payments. Then put all of that stuff in the file for the bank examiners, and never look at it again.

 

Finally,  look the guy in the eye and ask him this question, "Are you going to pay me back?" Watch how he reacts.  That's primarily what your decision should be based on.

 

Without going into a lot of details, throughout the years I have been involved in loaning  a lot of money.  First as an officer of a couple of banks, then a savings and loan association, then as a board of directors member of a bank or two and as an consultant for the real estate department of insurance companies from time to time.

 

I can tell you that the "Look 'em in the Eye Approach," at least for me, has worked very well.  My delinquency ratio was always much lower than average, and while I must have had at least one real estate loan go into foreclosure, I swear I don't remember it.

 

Right now, I have a client who has applied with a major bank for a 50% loan.  She has had two home loans before. 

 

The bank's underwriters will not be able to issue their decision and close the loan for a total time from application to funding of about six weeks.

 

My loans often closed in a week, never longer than two.

 

BILL CHERRY

Realtor-Broker

Since 1966

Keller Williams Dallas Premier

Direct: 214 503-8563

BillCherryRealtor.com

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Rainmaker
3,841,802
Sheila Anderson
Referral Group Incorporated - East Brunswick, NJ
The Real Estate Whisperer Who Listens 732-715-1133

Good morning Bill. I really like your style and believe that the look them in the eye and ask the question is very telling.

Jun 11, 2015 10:42 PM #1
Rainmaker
719,234
Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

Hi Bill, I like the personal approach very much. I wish all lending was done this way. After all, it is the right question, isn't it?

Bill Roberts

Jun 12, 2015 12:40 AM #2
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Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Bill - That approach would certainly be faster than what we see nowadays, and  I can see it working though I don't think a bank would agree these days.

Jun 12, 2015 03:51 PM #3
Rainmaker
2,822,331
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

"Are you going to pay me back?"  I love it!  Sometimes we pussy foot around with something that should be asked directly!

Jun 12, 2015 08:00 PM #4
Rainmaker
393,656
BILL CHERRY
Bill Cherry, Realtor - Dallas, TX
Broker & Wealth Coach

MRYL!! What a real pleasure seeing your name again!!  Hope you are doing spectacularly!

Jun 12, 2015 09:24 PM #5
Rainmaker
393,656
BILL CHERRY
Bill Cherry, Realtor - Dallas, TX
Broker & Wealth Coach

Christine and Old Friend Bill -- What's so interesting to me is the logger jam that the current underwriting and processing have created, and in reality it appears they have not measurably decreased the defaults, but they have created a great deal of unnecessary buy and seller remorse.

 

Jun 12, 2015 09:26 PM #6
Rainmaker
393,656
BILL CHERRY
Bill Cherry, Realtor - Dallas, TX
Broker & Wealth Coach

Thank you, Sheila!  Some like it, others are for sure I'm nothing more than a know it all blabber mouth.

Jun 12, 2015 09:28 PM #7
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Another excellent story by Bill Cherry. Love your stories, and love the approach.

Jun 14, 2015 02:15 PM #8
Rainmaker
3,571,231
Nina Hollander
Coldwell Banker Realty - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Bill Cherry ~ this "old style" of lending is harder and harder to come by these days. (Unfortunately!)

Jun 14, 2015 10:53 PM #9
Rainer
390,319
Anna Hatridge
R Gilliam Real Estate LLC - Farmington, MO
Missouri Realtor with R Gilliam Real Estate LLC

Bill you approach demonstrates the importance of personal responsibility.  I find it interesting that as an investor I am required to pay more upfront for a shorter term loan.  Logic says if I am going to be able to present a business plan to repay the loan quickly, then I have done my homework and already committed to the project.

Jun 14, 2015 10:53 PM #10
Rainmaker
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Olga Simoncelli
Veritas Prime, LLC dba Veritas Prime Real Estate - New Fairfield, CT
CONSULTANT, Real Estate Services & Risk Management

Bill - I was fortunate to have had full credit/management training at a major money center bank and worked with credit most of my career at a wholesale level. What you are alluding to is in fact the crux of credit decisions: Character (big C) and people (big P) considerations.

Jun 14, 2015 11:46 PM #11
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Bob Crane
Woodland Management Service / Woodland Real Estate, Keller Williams Fox Cities - Stevens Point, WI
Forestland Experts! 715-204-9671

Bill, that personal touch and involvement does make a difference, who could default after that.

Jun 15, 2015 01:52 AM #12
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Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

BILL CHERRY - a big difference in 'then' and 'now'! It's all paperwork and trust is in black and white and not in eyes!

I love those days....

Jun 15, 2015 02:41 PM #13
Rainmaker
393,656
BILL CHERRY
Bill Cherry, Realtor - Dallas, TX
Broker & Wealth Coach

All of that silly credit score stuff doesn't accomplish nearly as much as actually computing credit responsibility as Olga Simoncelli did for the bank.  Using those scores also removes the responsiility from the guy who made a bad loan.  It's like giving a trophy to every kid who participated in the spelling bee, whether he could spell anything or not.

Jun 17, 2015 10:49 PM #14
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Bill - to me it is crazy that on a $150K house today, that was $350K a few years ago, it is more difficult to get a mortgage, than when it was $350K. How can this be that at a price, which is lower than replacement cost based on the price PSF, is considered risky, and they did not see any risk giving a much bigger loan... Just because everybody wanted a piece of the pie and the Lenders were competing with each other?

Jun 17, 2015 11:14 PM #15
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