Residential brokers, if you haven’t already added small-balance commercial mortgages to your product offerings, 2016 is the year you should. According to The National Association of Realtors, there will be only a modest increase in existing home sales this year because of rising home prices, wage stagnation and uncertainty in the global economy.
“This year the housing market may only squeak out one to three percent growth in sales because of slower economic expansion and rising mortgage rates,” said NAR Chief Economist Lawrence Yun. “Furthermore, the continued rise in home prices will occur due to the fact that we will again encounter housing shortages in many markets because of the cumulative effect of homebuilders under producing for multiple years. Once the spring buying season begins, we’ll begin to feel that again.”
Adding small-balance commercial mortgages to your product offerings is a great decision. Here’s why:
You can earn additional income.
Closing small-balance commercial mortgages in addition to your residential business means extra income. You also have the potential to earn higher fees for your services, as the commercial mortgage business isn’t as regulated as the residential industry.
It’s an under-served market.
Despite the fact that there are many non-bankable small business owners seeking financing, there aren’t as many brokers and lenders who specialize in that niche. By adding small-balance commercial products to your services, you’ll ensure that you’re an in-demand broker.
There’s less competition.
Fewer brokers specialize in small-balance commercial mortgages than in residential, so you’ll have your pick of clients. Because there is less competition in this space for brokers, you’ll be more likely to close more loans.
As long as you choose the right commercial mortgage lender, closing small-balance commercial mortgages is simple. Make sure you choose a lender who handles the underwriting, processing and closing of the loan. This will free you up to seek out both residential and commercial borrowers looking for financing.
With the uncertainty in the residential mortgage market, residential brokers should seriously considering closing small-balance commercial mortgages. Closing these loans is simple and allows you to continue focusing on residential business. Don’t turn the small-balance commercial deals that cross your desk away; closing these loans will greatly add to your business’s success.