Posted by ray@lcorn on June 04, 2000 at 24:22:43:
I have learned through wasting a lot of time with junior executive types that it does matter WHO you know. When I deal with a new bank, the first thing I like to do is some snooping. I start by making a visit with no intentions of talking to anyone other than a receptionist or teller. I want a copy of their latest annual report. A lot of times it is laying out on a table in the lobby or reception area. That will usually have a nice picture of the President and the senior management team, plus all the great news about how well run the bank is, how many branches they have, expansion plans, etc. You can kind of get a feel for whether their focus is consumers or business. Good stuff to know about any company you consider doing business with. Banks are no different.
It will also tell me what size institution I am dealing with. I deal with the big “committee banks” differently than the local independents. The bigger the bank, the less likely the guy in the corner office off the lobby has any real decision making power. I want somebody with some juice. The annual report of a local bank sometimes lists the name of almost everybody with a title, and it is pretty easy to surmise who has the power. The larger chain banks like BoA, First Union, Wells Fargo, Citibank, etc., will operate with minimum power located in the branches. You have to get to the regional officers to find any real autonomy.
The report will also list the Board of Directors. It’s good to know who is on it, and why. Is it an “advisory board” or a real one? A bank with an advisory board is one where the officers have most of the power, even in the big banks, though that usually puts you back to the regional guys again. (Branch manager of a committee bank is not a glamour job.) A bank with a real Board, made up of heavy hitters in the community, is one where the real power rests with the board, and usually only the top officers will be able to sign off on big decisions. Also, I operate in a pretty wide geographic area, and over the years I have done business with an awful lot of people. It sometimes happens that I pick up that report and know some of those directors, or know one of the officers maybe from another bank I have dealt with, or know someone who will. I love getting an introduction to a bank VP or CEO from a Board member. It makes a difference. Those of you just starting in real estate take note, these are tactics you can use even when you don’t know anybody, and if you use them long enough, this is the way you build up those contacts.
I want someone with decision making authority because I am going to want a decision in real time. That decision is often likely to involve the bank getting a haircut on their loan. This was a commercial property in the original post remember, and they are never as cut and dried as residential properties. So it’s much better to not have to wait for phone calls to be returned and give some branch manager time to think of all the reasons it is not in the best interest of his/her new-found career being the one to take bad news about what their repo is really worth to the boss, who likely doesn’t have any more balls than the branch manager. I’d rather talk to the guy who can say “Yep, we’re way overloaded on this one? how do you think you can make a deal out of it?” From that point on, it’s just another negotiation. He who wants least wins.
The reason I mentioned propertIES, is just what it sounds like. Once I figure out who is in charge, I ask not just about the one REO (Real Estate Owned, a dirty word in banker school) that brought me to the bank, but about ALL his repos, big and small, commercial and residential. I’ve never seen a bank with just one repo. So I go in with a game plan? I want Mr. Banker to know that I have got it to-gether, and know what I am taking about. I’m there to help solve HIS problem. Sound familiar? So when he tells me about several repos, or gives me a list, the first thing I am going to do is turn one down. Not on the spot, but in our next conversation, probably on the phone. That sets the tone of me knowing what I am looking for, and being able to cut to the heart of a deal. I may go back to the one I said no to later, depending on how we get along.
Again, it comes down to being prepared. Go into a new bank prepared to do business. They will be, and if you aren’t they won’t waste much time making it easy for you.
Best of luck,