Once upon a time, I tried to live in Santa Fe, New Mexico. If you don’t know anything about Santa Fe, it is the New Mexico state capital and home to a world-renowned opera house, an outstanding chamber orchestra, the Georgia O’Keefe Museum, and many high-end art galleries. It’s also a town where celebrities hang out.
There used to be a joke about Santa Fe –
“Do you want to know how to make a million dollars in Santa Fe?
Start with two.”
Many people have the perception that brokering commercial mortgages can be very lucrative, “if only I could close that one big deal.” This is not a “get rich” mentality, but rather one of quiet desperation.
The way to become really wealthy in brokering commercial mortgages (or in anything, really,) is to provide tons of value to the marketplace.
“You will be paid in direct proportion to the value you create in the marketplace.” — T. Harv Eker
I often get asked by borrowers why they need a commercial mortgage broker – why can’t they just go into their bank?
There are two answers to this question.
- Bankers tend to be “order takers.” What I mean by this is a bank loan officer will take a borrower’s commercial loan application and submit it to underwriting. Underwriting can be either a software system or a committee, or both. When the loan request is analyzed, it either meets the bank’s criteria, or it does not. If it does not, the loan is denied; usually without explanation.
- Mortgage brokers can work with borrowers to a) match them with the best lender for their needs; and b) help them get their loan application and supporting documentation together in a way that sheds the most positive light. In other words, the broker’s role is to “add value” to the borrower by helping them find the best solution to their needs.
Commercial Mortgage Brokering
If you are looking to get into the commercial mortgage industry as a broker or intermediary, there is a relatively low barrier to entry, in the sense that there is no licensing requirement in most states, and no expensive equipment or infrastructure that needs to be purchased. Your initial “investment” is your own time and effort and a small amount of start-up and marketing money.
However, the low barrier to entry does not guarantee success. In fact, quite the opposite seems to occur. If it’s easy for anyone to enter an industry, and the potential rewards or profits are high, many people will jump in with no background or training and try to secure clients that they can then go out and try to find funding for. Most of these people will quickly get frustrated by the lack of success and may then start to charge “up front” fees to cover their basics. This only makes the problem worse, in the sense that now they have taken a potential borrower’s money and are still not having success in finding a lender who will fund that particular borrower’s deal. This can result in a disaster all around. Not to mention bad feelings and tarnished reputation for reputable brokers by association.
So, if you want to become a commercial mortgage broker, and you want to create success for yourself and your clients, here are some things you need to know.
Success Leaves Clues! — Enrique Montiel
A mentor of mine once told our Mastermind Group,
“If you want to be successful in business, notice where the money is already flowing, and put yourself in the middle of the stream.” — Marco Kozlowski
He later modified the word stream to become “RIVER.”
It is certainly possible to earn “rivers of income” as a commercial mortgage broker, if you follow one simple rule:
Provide rivers of value.
The excellent mortgage broker is able to do the following:
- Almost instantly size up a deal and determine where it might fit in her/his portfolio of lenders
- Know what the hot buttons are for any asset category and how to address them
- Identify desirable geographic locations for each type of commercial property
- Be able to engage with a borrower and earn their trust quickly
- Provide meaningful feedback from lenders in a timely fashion
- Get the borrower connected with the right lender to meet their overall needs
- Continue to move deals forward with the lender and underwriter
- Get excellent referrals from the people they do business with
In other words, know your job and perform at the highest level possible.
Don’t grab a borrower’s contact information and then ask everyone you know, including mostly other brokers who are as clueless are you are, if they know someone who can fund your deal.
Commercial Lending Academy
If you would like to learn more about what it takes to become a Commercial Lending Expert, and earn rivers of income, please visit the Commercial Lending Academy or call Barbara at (760) 809-6236.