Tips for a smooth closing ... How you open a transaction determines how it closesMike BoggianoSilver Hill Financial, commercial loans, small balance commercial loans If youve ever experienced less-than-ideal closings, a look back at the beginning of the transaction might reveal some warning signs. At the least, you can typically gauge a clients commitment to the transaction by his cooperation level right from the start. Borrowers who drag their feet in providing the information necessary to receive a pre-approval will likely present similar challenges during the underwriting process. Brokers can help by communicating effectively throughout the process and setting expectations up front. Small commercial loans are no different, but may require more education and guidance than with a residential transaction. Q: What can I do to make sure my small commercial loan closes quickly and with no surprises? A: How you open the transaction determines how the transaction closes. In other words, the tighter you control the front end, the smoother the road you pave to the closing table will be. Brokers can do several things to ensure the transaction moves as quickly as possible. Start by selecting a streamlined programnon-traditional small commercial lenders may offer closings in fewer than 90 days, with some closing in as little as 30-45 days. Its also important for brokers to educate borrowers on what they need to provide and give a general idea of the timeline. Here are some additional tips: Turn in a complete submission package It sounds basic, but youd be surprised by the number of incomplete packages lenders receive. Your lender partner should provide a checklist of requirements. Be sure to review this and ask any questions you might have. Clearly communicate to the borrower what documentation is required. Encourage him to submit the necessary documents as quickly as possible, offering your help if he needs assistance. Some lenders may provide an incentive for getting the package in early. Include appraisal fees and title forms as required. By following the lenders guidelines for submission and presenting a complete, organized package, you establish credibility with the lender. Most importantly, your file will receive quicker attention. Make sure the title is clean Commercial property titles are not like residential ones, where you can pull the title a day or two before closing. In the commercial arena, title requests typically take longer to process, and theres a higher likelihood of issues, such as liens or encumbrances, being present. While this does not mean that you will always encounter issues with the title, it pays to look into it sooner rather than later. Some lenders order the title when the underwriting begins, helping to keep the process as streamlined as possible. Ask your lender how title is handled. Ensure a speedy appraisal If your lender allows limited appraisals of most small commercial properties, youre already ahead of the game. In addition, one of the best things you can do early in the process is visit the property for a first-hand look. Make sure that the subject property matches the description (number of units, occupancy, physical condition, etc.) given by the borrower. Do an objective self-evaluation of the projected property value, taking photographs if necessary. Typically, it is also beneficial to submit all documentation (property financials, leases, rent roll, photographs, etc.) before the appraisal is ordered, thus not delaying the process. It also sends a strong signal to the lender that you have control of the transaction. In addition, help the borrower understand that commercial appraisals are more complex than residential; they require more time and cost. Manage expectations by explaining that valuation is based on an income approach and appraisers must conduct market research to compare rent, occupancy, vacancy and rent loss levels. Get complete property insurance and contact information from the borrower This will save time as you near closing day. Communicate! Effective communication throughout the process is essential to a successful close. Set and manage borrower expectations from start to finish. Ask questions of your account manager or lender contact whenever something is unclear; they are there to help. By facilitating a smooth transaction, you enhance your role as a trusted advisor to clients, which can earn you future business and valuable referrals. Mike Boggiano is senior vice president, national sales manager for Silver Hill Financial LLC. He may be reached by phone at (877) 676-1562 or e-mail [email protected].