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A message from the NAMB 2007 Convention Committee Co-Chairs

May 02, 2007

So you want to do commercial loan brokering?Anthony M. Gramzaresidential loan brokering, education, mentor I guess the first question I have to ask myself is, "Where do I start?" I've been doing residential loan brokering for the past four years, made a good living at, been able to take those vacations that I always wanted to take and luckily, I've been able to save some dollars for those rainy days. As I look out the window of my office, I am starting to see some of those rainy days coming - my residential business has slowed down, the phones are not ringing as much as they used to and I am starting to dip into my reserves. This cannot continue, and I am thinking to myself that maybe I should consider looking into the fascinating world of commercial loan brokering. But if I do, where do I start? How do I find the business? And if I am lucky in obtaining a client and sizeable loan request, what do I do next? Will I botch the deal? If I gather all the exhibits, will I find the right lender? Or will I be chasing lenders all over the countryside? Maybe even worse, will I be known as a "shotgun broker"? Will I know how to put a commercial loan package together? Do I know for sure what the lender will require in the submission? Can I make the package that appetizing and, once I do, know for sure how to present it and to whom? Will I know the commercial broker language in order to market the loan request? Hopefully I will be able to answer their questions, such as "What is the net operating income?" "What have you determined as your debt-service coverage ratio?" and "What cap rate are you using?" These are some mighty tough questions if you have not been schooled in this phase of our industry. Are you still interested in moving into the crazy world of commercial loan brokering? Well, if the answer is yes, then I can tell you that although the previous paragraphs might have scared you, it's not all that bad, and from my fellow commercial mortgage brokers, "Welcome!" Let me share some thoughts on how you can get started and join the many brokers who are enjoying the financial rewards together with the satisfaction of helping a client succeed in their investment goals. Your first must is education. If you are a member of the National Association of Mortgage Brokers or the National Association of Realtors, take advantage of the commercial courses currently being offered. The majority of these courses, in most cases, are taught by qualified commercial mortgage brokers and although they must stay within the required curriculum, many instructors will share some of their personal and business experiences. This provides some of the learning straight from the trenches. Next, get associated with an experienced commercial broker and let that person be your mentor. Learn from him and, if you have to, co-broker with him. Remember, he will guide you along those first few rough roads and, if the deal is made, maybe half of your commission to that mentor is better than none. As you proceed, you will then need to let people know that you are in commercial loan brokering. Pass out your business cards, send out flyers to your other broker contacts, attend real estate and mortgage meetings, market yourself and, if nothing else, be positive and persistent. Remember - protect yourself. Unfortunately, some people are not always truthful! If you don't believe that, I can share with you some real horror stories. Without question, use a mortgage placement agreement and get it in writing. Without an agreement, you have no protection and many lenders will not work with you if you are not the registered broker of record. Most brokers are willing to share their forms with new brokers, but as I always say, check further with your own legal counsel, since many states vary in their rules and regulations. Take the following words from poet Walter D. Wintle in his poem, "The Man Who Thinks He Can," to heart: "If you think you'll lose, you're lost; For out in the world we find, Success begins with a fellow's will, It's all in the state of mind." Lastly, if you elect to move forward into commercial loan brokering, welcome aboard. Don't worry about competition - instead, welcome it. This is a big world; there is more than enough business for all of us! Whether you do one or a dozen transactions in the coming year, welcome it, learn from it and cherish your membership in a group of professionals - commercial loan brokers. Anthony M. Gramza is president of Rochester, N.Y.-based AMG Commercial Mortgage Group Inc. and has been in the mortgage banking industry since 1961. He may be reached at (585) 264 9540 or e-mail [email protected].
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