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The most valuable letter you can write

Dec 05, 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 [email protected].
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