3 Tips to a More Consultative Financing Approach for Contractors

3 Tips to a More Consultative Financing Approach for Contractors tablet blog

It’s Home Improvement Month, and we want to empower and celebrate home improvement contractors. More people at home, and working from home, has caused an increase in the wear-and-tear on their houses—and the need for home improvements and home improvement financing.*

This month, we’ll share blogs on:

  • How financing know-how can simplify your home improvement business
  • Contractor tips to a more consultative approach to financing options
  • How contractors can position financing to meet client demands for more energy-efficient upgrades
  • A celebration of contractors during a past year unlike any other

This is the second blog in our Home Improvement Month series.


Every home is different—and, as a contractor, you know that every homeowner is also different. Whether it’s granite countertops, metal roofs, replacing an old HVAC system with a more energy-efficient model, or selecting home improvement financing options, you need to be ready to accommodate each customer’s personal vision of their dream home.

A consultative approach to every step in your process empowers you and your clients to communicate directly and transparently. This allows you both to understand expectations for one another and the home improvement project. With a shared understanding, you build trust and increase your odds for a higher closing ratio and increased sales amount.

It’s simple to adopt this consultative approach with three easy tips.

Tip 1: Investigate the Homeowner’s Motivating Factor for the Home Improvements

The “why” behind your customer’s project—an emergency repair versus a desired upgrade—holds the answer to other areas where your expertise will be needed. If you know that they are making necessary repairs to put their home on the market, you can help them select the quickest home improvement financing option. Alternatively, if they’ve only been in their home a year and are ready to make improvements, they might need your guidance for more energy-efficient choices in windows, doors and an HVAC system. Perhaps, the homeowner’s desire to invest in a luxurious and sustainable home remodel that will require a savvier understanding of financing options.

Each of these motivating factors clues you into an understanding of how financing options will impact your recommendations and next steps. You will uncover which of these approaches matches your clients’ motivators:

  • Close the sale quickly to meet their needs
  • Make energy-efficient upgrade choices
  • Provide home improvement financing option choices
  • Guide them on how to maximize their buying power for a large project

Ask lots of questions and investigate the motivating factors. You’ll be better informed to offer a consultative solution to their “why.”

Tip 2: Listen to their Home Improvement Financing Objections

When you investigate the reasons behind a client’s decision for home repairs, you’ll discover how to guide them to the right financing options. In the discovery process, objections to costs often arise. The more you’re familiar with the benefits and drawbacks of financing options, the more likely you are to help overcome their objections and demonstrate how to maximize their dollars.

Common objections you might hear in your discovery are:

  • Cash flow issues
  • Not enough equity in home
  • Lengthy and cumbersome approval process for home equity financing
  • Urgent timing to complete repairs

Often the hurdles of home equity financing, turn homeowners to credit cards—especially if there’s a need for speed. In Houzz’s survey, the #1 reason cited for using credit cards for home improvement financing was quick access to funds (38%), followed closely by ease of use (35%). It’s also an appealing option for customers that plan to pay their bill quickly.

The rush to pay off this debt is due to the high interest rates charged by credit cards. APRs for new credit cards cited by Wallethub range from 13.04% to 23.91% as of Q4 2020. So, while credit cards can be a good option for customers that can pay off their debt quickly, homeowners that need to spread their payments over longer periods may risk dramatically increasing their total cost after interest. This also limits their buying power for home improvement investments.

In terms of cost, home improvement loans typically offer interest rates that fall in the middle. For example, standard installment loan options offered through Mosaic’s platform* currently (as of May 2021) feature APRs from 2.99% to 11.99%, depending on the length of the loan term. This makes them comparable to home equity financing in some cases and significantly cheaper than the credit card rates cited by Wallethub.

If you’re listening to their objections, you’ll be better situated to consult your customers on the right home improvement financing options.

Tip 3: Offer Solutions at Every Stage of the Home Repair Project

You get to make all the important decisions that impact your business and can consider how home improvement financing options show up along the way:

  • Which financing options provide you the greatest control over your processes and planning?
  • Which options give you the room you need for sustainable profit margins with the lowest fees to fund?
  • Which financing options offer a quick approval process starting at the point of sale?
  • Are there points in a project when a client might need to explore a combination of home improvement financing options?

Some homeowners may wish to combine financing through Mosaic with other financing sources. For example, a homeowner facing a weeks-long wait for a HELOC for a major renovation might opt for a home improvement loan through Mosaic to take care of immediate needs such as an emergency HVAC replacement.

Grow Beyond the Transaction

Contractors often leave money on the table when they focus only on the transaction. You maintain control at every stage of your project when your knowledge of financing options demonstrates a consultative approach to meeting your client’s needs. Remember to ask lots of questions and listen.

Click here to learn more about how to become a Mosaic contractor partner.

* Home Improvement Loans through the Mosaic Platform are made by WebBank, Member FDIC, Equal Housing Lender.

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