Is this the year to expand my horizons?Anthony M. Gramzacommercial loan brokering, Certified Commercial Investment Member
Oh, what a great five years this has been in the mortgage
funding marketplace. Money keeps on flowing, clients are purchasing
and refinancing at a pace that in some cases we could not keep up
with, lenders are knocking at our doors seeking the business that
is being generated with very little advertising and more
individuals are coming into the industry to take advantage of the
attractive commissions that can be made. Now, as we head into 2006,
we start wondering if this year will be like others. Will this year
be as generous as 2005, or can we expect some real changes? Will
there be a definite slowdown in new home purchases? Have the
current homeowners maxed out equity in their home mortgages? With
all of the negative news in our own country as well as in other
parts of the world, is there a concern that a slow down in
residential activity will continue to happen? Depending on how you
see the situation in your own service area, on what you read or
hear from various sources and on how you personally view the
national and international climate, the answers may vary. Our
crystal ball says "yes" to all of the questions posed. We also
realize that in many cases, we cannot control the unforeseen issues
that are in other parts of this nation or around the world. In some
cases, we cannot prepare for or foretell future happenings. We
realize that there will be a slowdown - how much, we do not know
nor wish to guess, but it will continue to happen. If you have been
in this industry for the past 10 years or more, you can look back
at both the ups and downs of our industry and say, "I've
experienced it."
So if you believe as we do, and you are starting to feel the
slowdown but enjoy this industry and wish to continue on the career
path that you are on, you need to expand your horizons. Assuming
that you will continue in the real estate and financing industry
and make it a lifelong career, you need to consider expanding into
the world of commercial loan brokering. It is fascinating,
challenging and hopefully, in your case, financially rewarding.
This field is wide open; it's not scary; it's not difficult and
competition should be the least of your worries. Just remember, you
are the professional, and with further education and on-the-job
training, you have a commodity that many investors seek and
desire.
Well, if all of this sounds too good to be true, just remember -
it does not happen overnight. It will start with additional
education and classes in commercial loan brokering and real estate,
and it will continue with many long hours of on-the-job training.
Expect to make mistakes, for without mistakes, you can have no
successes. Expect to lose some deals and don't expect to make a
fortune in the first year or two.
We strongly recommend commercial loan brokering training classes
offered by the National Association
of Mortgage Brokers and Certified Commercial Investment Member
(CCIM) classes through the National Association of Realtors.
The current two eight-hour classes offered by NAMB in commercial
loan brokering deal with the basics - the various commercial
property types, the various formulas in arriving at net operating
incomes, valuations through the use of capitalization rates,
arriving at the debt-service-coverage ratio to satisfy the lenders'
underwriting requirements and how to structure the correct
presentation (package) for lender underwriting and eventual
approval. The advanced course considers a multi-use building and
provides the participant with an opportunity to review previous
income and expense statements, correct and modify the proposed
statements to meet the requirements of any lender, analyze income
streams for each type of facility within the building structure
(apartments, retail and office space) and arrive at an estimated
value after careful review and injection of expense requirements of
the lending community. Taking these classes with your fellow peers
allows for good dialogue, which enhances learning by each of the
participants. Classes allow learning from others together with how
they think, feel and act on certain items in brokering a loan
request. It also provides the opportunity to hear comments from
your experienced instructor who, in most cases, is a practicing
commercial broker himself. Not that you want to hear all of the war
stories, but you can learn from those individuals who have spent a
good deal of time in the trenches.
The CCIM classes are much more detailed and advanced and are
taken by truly dedicated brokers who seek the CCIM designation and
consider the field to be their life long career. The program is in
six phases; each phase usually runs six days, is followed up by an
extensive examination after each phase and then the applicant must
pass a final written and face-to-face examination with the
reviewing committee. A person holding the CCIM designation is well
thought of, respected and known in the real estate field as a true
professional. I recommend that anyone considering this avenue of
designation to contact his local real estate board and committee
chair for more details.
As a national instructor in commercial loan brokering for NAMB,
I stress the fact that this side of our industry is not difficult;
it just seems so because of a lack of understanding of the
nomenclature, the simple formulas and the willingness of many
brokers and agents to let themselves be intimidated. Brokers
intending to take these courses must dedicate sufficient time and
effort into reviewing the manuals and practicing on potential cases
and problems. They must also be willing to accept mistakes and
failures that are bound to come up. You can read many articles and
books on commercial loan brokering, but I must tell you that I am a
strong advocate of training classes, working with a trusted mentor,
on-the-job training and maintaining a professional and honest
attitude. As many will attest, your reputation follows you and the
majority of your future business comes from referrals of past
clients, lenders and co-brokers. If you are up to the challenges of
this side of our industry, look seriously into expanding your
horizons and learning more about the crazy and exciting world of
commercial loan brokering.
Anthony M. Gramza is president of Rochester, N.Y.-based AMG Commercial Mortgage Group Inc.
He may be reached at (585) 264-9540 or e-mail
[email protected].
