At its highest level, commercial mortgage brokerage is a collaborative process of discovery. On
borrower side, more broker is able to learn about property and borrower’s needs, more effectively he can focus his thinking and utilize his experience to assist borrower in structuring deal. On lender side, a good broker carefully cultivates an effective and aggressive group of lenders. These are kind of worthwhile relationships that can only develop over time. With each and every deal relationship is tested and seasoned with mutual respect. The bar is raised. The boundaries are stretched. The stakes are always high because of faith that has been placed in broker by client. Therefore, if disappointed by a lender’s execution, or by changes that (hopefully won’t) occur from time a lender quotes a deal to time lender issues a commitment letter, that lender may never have another chance to win over that broker.Part of value, therefore, of a seasoned mortgage broker, is accumulating and honing these performance-based lender relationships to a fine edge so they can be brought to bear on an individual borrower’s transaction.
At a sophisticated level, commercial real estate financing requires finesse, experience and aforementioned carefully cultivated, time-tested array of “arrows” in broker’s “quiver”. Or, to state it more generically: to be effective, one needs right tool at right time to accomplish a particular job.
What are implications of all this for borrower? In return for a mortgage brokerage fee, all these time-tested lender relationships and broker’s insight, judgment and advisory skills are leveraged by borrower for a finite period of time without need to employ such expertise on a permanent basis. All in all, I’d say it’s an amazingly efficient arrangement.
So, who should you turn to when it’s time to reach out to a broker? Which company should you choose? As in any endeavor, there’s a pyramid of quality and expertise: plenty of mediocrity at bottom, some decent performers in middle and a small number of virtuosos at top. As in choosing a doctor, a lawyer, a contractor or a vacation, nothing beats a word-of-mouth recommendation from someone you know and trust. Next there’s old-fashioned due-diligence which would include doing a web search and reviewing newspaper articles (for example its easy to search archives of NY Times), calling accountants and lawyers active in real estate for recommendations, and asking for references from broker’s past clients. Ultimately, it will come down to a face-to-face meeting, answers to your questions, and your gut feeling about broker, his ethics and his company. The depth of organization is quite important because a great broker must have top-notch administrative, analytical and processing support to be your optimal choice.
When you consider that owner of an apartment building, office property, shopping center or owner-occupied property will live with economic consequences, restrictions and conditions of a new mortgage transaction for years, best option for an owner is unlikely to be achieved by picking up phone and calling one or two familiar banks. The smart owners know this and are happy to “outsource” mortgage brokerage function, knowing that they will get benefit of broker’s knowledge of current marketplace.
