The world of commercial real estate finance can be confusing. Here are 9 tips to help you find the best commercial mortgage broker. Some say we are an industry of acronyms. Whether its NOI, DCR, LTV, DTI, DIP, FDIC, you catch my drift.
9 Tips to help you find the best Commercial Mortgage Broker
- Commercial mortgage broker or mortgage banker? Its important to understand the difference. Commercial mortgage bankers represent a handful of lenders on a correspondency basis. Meaning these lenders trust these mortgage bankers to underwrite and close their loans. Almost like having a local office in the area where the borrower is located. Mortgage bankers typically have a fiduciary responsibility to their lenders, and may service the loans they orginate for those lenders. Commercial mortgage brokers; however, are purely borrower representatives with no obligations to the lenders they work with. While its important for all commercial mortgage participants to maintain good relations with their capital providers, the commercial mortgage broker has the unique ability to stand up for and negotiate on behalf of the borrower. While mortgage bankers may do some brokerage with other lenders they don’t represent, there can be a conflict as its their job to funnel deals to their correspondent lenders. Also a typical mortgage banking firm lends in a somewhat narrow box of transaction types. The skillsets are a little different between mortgage brokers and bankers based on their modus operandi. A strong commercial mortgage broker can parachute in, get the job done, and pack their trash on the way out; having developed the ability to figure out how to get a loan closed even when there is no clear path. Whereas a mortgage bank is more likely to pass on the transaction if it is not in their wheelhouse of correspondent lenders.
- Is your commercial mortgage broker analyszing your transaction by gathering all property and borrower financial data prior to discussing your deal with lenders? The up front analysis is the key to a successful loan closing.
- Is your commercial mortgage broker listening to your concerns and ideas? Are they consulting with you as to their approach and strategy regarding your deal. Are they making suggestions to guage the best structure for the transaction? Sometimes the borrower’s original desired structure is not the optimal one. Does your commercial mortgage broker speak up?
- Are they experienced closing the type of loan you seek. Can they work through loan documentation issues with the lender for any customizations or needs you anticipate after you close the loan and during the loan term?
Apples to Apples comparison is how to find a strong commercial mortgage broker
5. One of the good 9 tips to help you find the best commercial mortgage broker, is to ask if your mortgage broker is comparing the options available to you and quantifying all of the structure and loan terms so you can make an informed comparison? An interest only loan versus a 20 year amortization can change the repayment structure significantly.
6. Does your mortgage broker have an entrenched team of vendors they work with, like title, escrow, surveyor, etc. These relationships can be paramount if there is a timing deadline for closing, and also in general for smooth execution of your loan.
7. Does your commercial mortgage broker understand finance? Being a salesman is great but in the commercial mortgage industry it only gets you so far. A strong commercial mortgage broker excels both in sales/negotiating and in real estate math and finance.
What does a commercial mortgage broker do
8. A strong commercial mortgage broker communicates clearly all of the news. Both good and bad. So that things can be retooled as needed. Sometimes, due to nobody’s fault an issue like an unknown lien on the property, or an unknown easement show up in the lender’s due diligence. In order for your commercial mortgage broker to properly work through these items, they need to keep you informed and gather any information you might have on these.
Why use a commercial mortgage broker
9. Does your commercial mortgage broker have a track record of success closing similar deals to yours. These would be part of 9 tips to help you find the best commercial mortgage broker.
Commercial mortgage broker Financial Compound would be happy to discuss your transaction and see if we can help. Typically we can ballpark a loan quote for you on the initial phone call.