How we define ourselves often dictates how other people see us, both personally and professionally. In the mortgage business, perception is reality, and the reality that you create as a Mortgage Broker defines your status to both clients and lenders.
Brokering commercial real estate deals is a very separate and distinct process from brokering residential home loans. It would be safe to say that at least 50 percent of all commercial transactions are originated by residential brokers and bankers. This should not come as much of a surprise, as the number of home loan transactions far exceed their commercial counterparts, just as the numbers of residential brokers are significantly greater than commercial loan originators. It follows that both residential brokers and commercial brokers who want to have greater success in the marketplace, must not fall into the trap of doing business as usual. Gaining a fundamental understanding of what drives members of the commercial loan process, and adjusting your sales techniques in response, will determine whether or not you cross over to professional broker status. Just as wearing a uniform does not make one into a professional soldier, a business card does not transform one into a professional broker. Affiliation with a long-established and well-recognized firm will only get you through the door. Failure to cross over predetermines that your career will inevitably fail and leave you with little more than water cooler conversations about failed deals, blaming borrowers and lenders for being stubborn and unrealistic.
What makes a professional broker?
Closings raise more than just ego, and experience does more than separate professional brokers from the great masses. There is nothing more demeaning to a broker than a conversation between a borrower and banker, referring to the broker as typicalgood talking, energetic and hardworking, but not particularly knowledgeable.
A professional broker must have skills in three fundamental areas, listed here in order of importance:
*Salesmanship and Negotiation
*Analysis and Underwriting
*Agenda Analysis of Borrowers, Brokers and Bankers
The typical broker will usually be quite comfortable defining their skills in this manner, but might not consider the last item as significant to most transactions. The professional broker, however, reverses this order and places agenda analysis as the top priority.
The very best brokers take the time to understand the agendas of both the borrowers they represent and the lenders that fund their deals. Brokers must accomplish their assignments without subverting the other players. If brokers allows their agendas to take precedence, they are ensuring very little repeat business and loyalty. Simply closing a deal does not translate into a fully successful transaction.
I know brokers who are no more professional today then when they started 20 years ago. Their greatest failing is that they continue to define themselves largely as a salespeople, merely scratching the surface of fundamental discipline. Hence, they remain typical brokers.
Lets talk agenda
On the most basic level, each part of the equation needs to know the basics of the other:
*The borrower seeks to conclude a deal on with the best terms
possible, in the shortest time period and pay the least amount of
*The banker/loan officers job is tied to funding deals. However, loan officers do not work alone. They are constrained by programs and guidelines, and by the underwriters who enforce them. Additionally they must be aware of the politics and mentality of the committee who has the ultimate power in deciding whether a deal is approved or consigned to the trash heap.
*The broker needs to make money by finding borrowers and matching them to appropriate lenders who will close their deals.
On a more sophisticated level
With respect to their borrowers, brokers must go beyond the facade that borrowers project, to get the real agenda. A professional broker is part psychologist and part politician, moving the clients into a position which will conclude a deal on acceptable terms. The typical broker, however, knows that his client has no real respect for his role in the transaction and is fundamentally opposed to paying someone a fee for less than professional service. Borrowers view the typical broker as a necessary evil, where their only redeeming quality is the size of their rolodex. Non-professional brokers pass impossible demands to their lenders who, in turn, view the broker with disdain.
Remember, perception is reality! As long as this perception lasts, a real offer and acceptance is not in the brokers immediate future. Furthermore, the typical broker continues to waste even more valuable time without realizing what his real job is. A professional will not only analyze the deal, but also his client, and seek offers that can be delivered on terms that should be acceptable to both the borrower and the lender. In the end, delivery is key; professional brokers continue to book deals because they are skilled enough to move deliverable deals.
With respect to their lenders, brokers must supply their bankers with accurate information. This information must not only cover the parameters of the subject collateral but also their clients expectations as to deal structure. Professionals seek to make their bankers participate in the sales processthey enlist their advice on how to present the lenders offer in such a way as to overcome the obvious negatives that will be thrown out by the client.
Many loan officers will treat the typical broker as an annoyance as much as a contact, believing that because they control the money, they have the right to dictate terms in a superior and often arrogant manner.
Never forget that they need you as much as you need them. If they view a broker as non-professional, they will often default to giving you the best program quote, rather than the most realistic, and they will watch you go back to your borrower like a puppy with a new bone. By selling this offer and getting the deal off the street, you fulfill one of their prime objectivesbigger pipelines.
Things to remember: A to-do list
*Leave your ego at home.
*Delivery is everything. If the deal does not close, nothing else matters.
*Spend more time talking to your clients before seeking offers. How realistic are their agendas?
*Learn how to underwrite a deal on the lenders model. Do not be afraid to ask questions.
*Do not sugar coat or skirt important issues. The time to talk about problems is right in the beginning.
*Problem analysis is a valuable tool in tempering your clients expectations.
*Expectations are reality. If these expectations are unrealistic, and you allow him to manipulate you, all is lost.
*Expand your abilities, work with people who will work with you, and always ask questions.
My strongest recommendation is that you align yourself with a banker that will educate you and elevate your ability to analyze deals on the front end. This will work to your favor, educating your clients and bringing their expectations into alignment.
Good luck, and always remembercross over!
Marty Wyenn works in the commercial lending department of Banco Popular North America. He can be reached by phone at (908) 353-6336 or by fax at (908) 353-1012.