The most valuable letter you can write

The most valuable letter you can write

December 5, 2004

Commercial Loan Brokering … Fear Not!Anthony M. Gramzacommercial mortgages, refi boom, NAMB educational courses
Here we are, at the beginning of 2004. The market is softening,
the refi business is slowing to a snails pace, and I am examining
what will happen throughout the coming year. The past three years
have been great for those brokers who have originated record
numbers of transactions, and for individuals who have purchased
existing homes, built their new dream home or who needed to
refinance to lower their rate and, in most cases, reduce their
monthly payments. So, now what do you do?
For the past several years, I have stood at the pulpit and
continued my preaching about the advantages of commercial loan
brokering. Some have heeded my words, while others have let them go
in one ear and out the other. For those who shouldered the
challenge, education became a must, and from there, on-the-job
training has been part of their daily activity over the past
months. What about the rest? What is the fear? And more
importantly, why be afraid?
From the pulpit, I hear the following apprehensions:
Commercial mortgage financing scares me.
I fear the unknown.
Commercial brokering is too cutthroat.
I am concerned about the competition.
It is too time-consuming.
I have to wait too long for my commission.
I dont understand the business.
I don't understand all of those crazy words and
definitions.
Some of these concerns may be true, but the majority is blown
out of proportion. The important question to ask is, "If these are
obstacles, what can I do to overcome them? The answers are
education, determination, perseverance and patience. The
opportunities are out there, including guiding clients in their
financing needs, a plentiful supply of commercial mortgage funds,
attractive interest rates, longer terms, higher loan-to-values, and
a multitude of lenders who are seeking your deals.
Mortgage brokers have a great advantage through the National Association of Mortgage
Brokers. NAMB offers a multitude of training courses, three or
four of which deal with commercial loan brokering and are taught by
approved national instructors who are commercial brokers
themselves. By attending these courses, students gain from an
extensive curriculum approved by NAMB and many state licensing
agencies, and learn from those who are on the industry front lines.
The gift of sharing without a great deal of horror stories lends to
the education of the participant.
Education serves in a multitude of ways. It improves your
knowledge of the commercial loan business and the products offered.
Education also facilitates a better understanding of how the broker
has arrived at a value, loan amount, annual debt service and the
debt service coverage ratio. In addition, brokers achieve a higher
level of confidence through education. And with all of this, isn't
the client impressed with the fact that they have a broker who is
knowledgeable and has formed a bond of confidence in the mind of
that client? Without a doubt, the answer is yes.
Are all commercial deals successful the first time around? In
many cases, the answer is no. Even experienced brokers use the
"20/2" rule20 inquires, 20 deals to review, and two may actually
close. Troubling? Maybe, but for those transactions that are
successful, the rewards (your commission) can be very gratifying. I
have always been taught that patience is a virtue. If you have been
involved with any sales industry, then you know that success
doesn't happen overnight. It is a time-consuming process that can
be very frustrating because sometimes you have no control over your
deal once it passes to the lender, and there is always some level
of risk.
Yes, there is a limited amount of risk. But in the wise words of
the great soothsayers, "There are no rewards without risk." Now is
the time to step forward. Now is the time to go ahead and take that
small risk. Now is the time to move down that path which can turn
from black and brown to greengreen from the greenbacks that make up
you commission dollars.
And what about our clients? They have as many fears as we do,
except that they fear the unknowns of a large real estate purchase,
especially those who have never made such a purchase before. If we
do our job correctly, we can help our clients overcome their fears
and by eliminating fear, we help make the deal happen, thus
enjoying the rewards shared by all parties.
Education will remove many of your fears about commercial loan
brokering. It builds up confidence, provides the necessary tools to
assist in the decision-making process and reduces the fear of
competition. So, fear not! Hop on board to the way of success, and
welcome to the world of commercial loan brokering.
Anthony M. Gramza is president of Rochester, N.Y.-based AMG
Commercial Mortgage Group Inc. He may be reached by phone at (585)
264 9540 or e-mail amgmtg@frontiernet.net.

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