The Challenge

In the tight credit market, some homeowners are proposing alternative means of paying for remodeling projects, such as a monthly annuity for a relatively small aging-in-place job. How do remodeling salespeople evaluate these possibilities and not get burned?

The Reality

You might need to be more flexible in the current economy, says Dave Mattson, CEO of Sandler Systems, which has many remodeling clients. “Creativity is situational, based on where you are in your business and where we are in the economy.”

The Opening Salvo

As with live bombs, the key is to defuse financial surprises before they blow, Mattson says. You know the prospect has thought about how she or he will pay for the job, so ask about their plan early in the conversation.

“Before you called me, I’m sure you went over a lot of what-ifs involving your house - what you want to achieve and what you think you can afford. Can we talk about that?”

The Calculated Risk

Identify your break-even point and decide if the potential reward outweighs the potential risk. Will that annuity cover your costs within five months - or within a year? The shorter the time frame, the lower your risk exposure.

Also think about the “human factor” of such a transaction, Mattson cautions. In the case of the annuity, for instance, will it automatically be transferred to you, or will the homeowner continue to receive it (and potentially spend it before you see it)?

The Reciprocal Perk

Besides helping you sell jobs that you might not otherwise sell, being flexible can generate goodwill and loosen up a little money that the homeowner had been holding back. “Buyer psychology says that they’ll reciprocate your goodwill and up it a bit on their end,” Mattson says.