6 Ways to Help Your Clients Finance Their Timber Frames

by: Brice Cochran

Timber frame clients have a lot in common with one another, including the challenges most of them face. One major challenge is financing their timber frame project, which becomes a barrier to timber framers as clients struggle to find the money to pay for the frame the frame. This problem arises with both residential and commercial construction projects. Simply put, banks don’t like releasing money for materials that are not onsite, but timber framers need to get a percentage up front to purchase timbers and cover overhead. How can we overcome this most fundamental of obstacles to construction? 
Here are six solutions you can offer to your clients:

  1. Educate them on this problem before it comes up. Over the first couple of conversations with them, ask how they are planning to finance their project. If they are planning on working with a bank, then start the conversation about project flow and the need to place orders prior to the start of construction. Frequently, if a client knows about it early enough they can find a solution themselves.
  2. Go visit a couple of banks and mortgage brokers in your area, find one that has a good reputation and will work with your draw schedule, and then recommend it to your client. Not only will this be great for your client, but it will benefit the broker – and the relationship you develop with the broker will yield long-term rewards to you by helping streamline the process for future clients. That connection with a broker (or brokers) may also give you another voice in your word-of-mouth marketing effort.
  3. Talk with your own bank about giving your client a short-term loan, and have your client talk to their bank as well. There may be more than one type of loan available to your client: often they can use the equity in the property or other properties they own for collateral. 
  4. Talk to the contractor. Often we work directly with the homeowner, but sometimes going through the contractor can be the best arrangement. The contractor will generally have deposit payments from clients or other means of paying you on your terms. The contractor is part of the team so make sure to include them in this process.
  5. Arm your clients with information that will help them with the appraisal process. There are not a lot of timber frames for sale, making a comparison report difficult for an appraiser to develop. That means the appraiser has very little wiggle room to give extra value to the timber frame. However, you can offer images and other information to help relay the beauty and sustainability benefits that naturally occur in most of our projects, which will help push the value up. If your client gets an appraisal with a higher evaluation, the cash flow on the project may be a little easier. 
  6. Work with them and be flexible. If all the other options have been exhausted and you have enjoyed working with them, then talk through it with them. Never put your company at risk, but there may be opportunities for some give and take on both sides and a mutually satisfactory outcome.

Paying for a timber frame is sometimes a daunting task for your clients.  However, if you educate and help them through this challenging aspect of their project early on, it might just help you win the next frame.

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