Brokers are always looking for simple ways to make more money, and one of the best is to start closing small-balance commercial mortgages. However, these loans – like any other – can present challenges. This is especially true if you’ve chosen to work in the niche that serves non-bankable commercial borrowers.
While some issues might arise, these deals still present brokers with a great opportunity. All it takes is the know-how to place these loans with the right lender and to do the legwork to allow the closing to be as smooth as possible. Here are some tips to help make your closings simpler:
Get the full story.
Before you collect or submit any paperwork, have a thorough conversation with your borrower. Ask them about their credit history and their business or investment experience. Find out how much money they need to accomplish their goals. Talk to them about the property they’re looking to pledge as collateral – what type of property it is, whether they have any tenants, where it’s located and how large it is. Find out how they’re planning to use the funds. All this information will allow you to get a good sense of the deal and to determine where to place this commercial mortgage request.
Obtain the necessary documents.
Once you’ve gotten to know your borrower, their business and what they’re looking for, you should begin to collect the documents you’ll need to submit the deal. Commercial mortgage lenders have varying requirements, so double check what they’ll need from you to get the process started. A good rule of thumb is to get a completed 1003 or application, a recent credit report with scores and tradelines, and a summary of the deal. Photos of the property are also great; if a lender doesn’t have any from the borrower or the broker, they’re forced to rely on Google, and those pictures don’t always tell an up-to-date story. Having all this information up front will keep the deal moving.
Keep the lines of communication open and quick.
When you’re working on a deal, make sure that you’re easily accessible to both your borrower and your lender. Respond to emails as promptly as possible, and if you miss a call, try to respond to any messages they leave as quickly as you can. Make sure that you’re sharing all the information with all involved parties so that everyone is on the same page when it comes to the progress of the commercial mortgage.
Follow your lender’s directions.
When you want a loan to close fast, your best bet is to take the lender’s lead and follow their directions. For example, a common issue lenders run into is brokers who order the appraisal and title. Many lenders want to handle this on their own, so it’s best to hold off unless you receive instructions from the lender to do so.
Be ready to help solve potential problems.
Like any business deal, it’s not unheard of for a commercial mortgage to hit a few snags on the way to closing, especially if you’re working with non-bankable borrowers. As the broker, it’s your job to help the borrower and the lender to resolve any issues that arise in order to make sure the deal closes. The lender will likely be able to handle any problems but be ready to assist if they need you.
Keep your borrower focused.
It can be tough for some borrowers seeking commercial mortgages to realize they can’t qualify for bank financing. It’s important to keep your borrower’s eyes on the prize and focus on the goals they want to achieve with the money. At the end of the day, your they need this money, whether it’s to pay off their debts, to make property improvements or to purchase a commercial building. Sometimes a reminder that this money will allow them to improve their financial situation or their business is all it takes to get your borrower to the closing table quickly and smoothly.
Closing small-balance commercial mortgages is a great opportunity for enterprising brokers. While these loans can present some challenges, they’re a great way to earn more money fast. Following the above tips will make things simpler and smoother for your borrowers, your lenders, and you.