Commercial Mortgage Training – Sales

One question all people in sales, regardless if they’re in the commercial mortgage business or not is, “should I work on this project?”   Perhaps though, this question is all the more important for commercial mortgage brokers due to the complexity and time that is required to be put into each individual deal.

Implied by this question are a few other questions, like “do I have any control over the borrower?”  Or “does the borrower have any loyalty to me or is he just rate shopping and or verifying what his “guy” is already telling him.  Is this a doable deal?  Do I know where to place the loan? And assuming I know where to place the loan, are the rates and fees competitive with that bank?”

So again, “do I want to work on this loan or pass?”  If your borrower has very little loyalty and you don’t know the particulars of the niche you are probably not going to win that deal.  What you will get is some “training” or as one of my prior bosses said, “practice”.  If you’re in a similar position as mine, you’ve had enough practice and only want to get paid for your hard work.   

The flip side of this is perhaps you know the niche cold and you know the best banks in the country for that deal; you may not be that concerned if the borrower has any loyalty to you or not because you know you’re going to produce the best offer and as a result will be in a very strong position to win the business.  However, even if you have this confidence, be aware that you may still want to protect yourself and your time with a commercial broker agreement. 

Exclusive or non exclusive agreement?  Many traditional commercial mortgage brokers have their borrower sign an exclusive agreement, which among many items says that the borrower agrees to work with the broker on an exclusive arrangement.  What this boils down to is that the broker will get paid regardless of where the borrower decides to close his loan.  Think of it as a listing agreement for commercial real estate brokers.  The borrower commits himself to work with one broker who in turn will be that much more motivated to do a thorough and complete job on the loan request.   

As far as the sales perspective with this, if you don’t know the niche that well, or you do know it’s going to be a difficult deal to get done, you should seriously consider having the borrower sign your exclusive  fee agreement to protect your time, resources and self respect.  If your borrower is not agreeable to the document, it’s advised to walk from the deal.   

The reality that you work on the loan request for months and produce several term sheets all for your borrower to end the relationship with “thanks Joe (you) for all of your hard work.  I know you put in a solid effort and I plan on recommending you to my friends.  But xyz bank came in with a better term sheet, so we’re going with them.”   After a few more questions you discover that the other deal is only .1% lower than yours and you’re out thousands of dollars and two months over 10 basis points.

“Should I work on the deal or pass” is a one of the most important questions we can ask ourselves.  And in my humble in opinion is what separates the really successful commercial mortgage brokers from the mediocre one.  Think of it this way, if you knew from the beginning of the loan request that it is an unfundable deal and or that your borrower was just shopping you, you would never work on it.  Right?!  And that is an essence the whole point of the question. 

 



Repossession