Some things in commercial real estate really are simple, and this is one of them. Here are two simple questions that you need absolutely no industry expertise to ask, but that you absolutely need to be asking your clients.
Our business doesn’t always seem like an easy one. After all, we deal with extremely valuable assets or with complicated legal arrangements that can last for years. Those of us who are in property management are responsible for countless parts of a building’s operations and for managing scores of relationships.
You’d probably think that the most important question in the commercial real estate industry is like the Accounting oral test question in the movie Back to School – one question, with 27 parts. In actuality, the two best questions in a savvy commercial real estate advisor’s arsenal contain a combined total of just five words. When asked at the right times, these five words will help you better understand your clients’ motivations, wants, and needs — and in turn, how you can best help them achieve their goals.
Question 1: Why
For a single, simple word, “why” is amazingly powerful. When you’re a new-to-the-business advisor, you can use it to keep a prospect talking while you’re figuring out what to say next. The most senior advisors in the industry, on the other hand, use it to gain deeper insights. Just about any response from a client can be met with “why,” and in just about every case, “why” will get you closer to the information you need to help a client take the appropriate actions to achieve his or her investment goals. Here are some examples:
- I bought this asset to hold it long-term… Why?
- I manage this asset myself… Why?
- It might be time to 1031 to a new property… Why?
- I usually like to put my tenants on short-term leases… Why?
As long as the answer to the question isn’t completely obvious (and sometimes if it is, too!), “why” is one of the most powerful questions that you can ask. It can also be a good follow-up and, with the addition of a few words here and there, can even be used a few times in a row. Here’s an example:
“I manage this asset myself.”
Why?
“Because property managers are too expensive and don’t do a very good job.”
Why do you say that?
“I’ve worked with three different ones and that’s been my experience.”
Question 2: What If You Don’t…
“What if you don’t…” is the second important question. It is extremely powerful because it strips away artifice and leaves true motivation behind. How many times have you had a client tell you that he was going to sell a building and then turn out not to do a transaction? To avoid this problem, consider asking “What if you don’t sell your building?” Sometimes, the client will tell you that she is fine holding onto it. In other cases, she’ll tell you that she has no other option or that the other options are too unattractive to stop her from selling.
Some commercial advisors are scared to ask a client about not taking action. However, just as it’s almost impossible to talk a client into doing something that she doesn’t really want to do; it’s equally hard to talk her out of doing something that fits her strategy. In either case, what you really want to do is to find out the truth of what the client actually will do so that you can begin making plans to help her.
These two questions are both easy and difficult to ask. Though simple, they are powerful. And in addition to helping you uncover which prospects need your help, they’ll lead you closer to how you can help them.