Here's a not-so-secret secret: Surviving and succeeding in the mortgage business is tougher than ever. There's more competition. There's more borrower distrust. And, to top it off, the lender market is in disarray, with new announcements of closures and mergers every week. So what is an honest, hard-working mortgage officer to do?
At least, that's what all the hard money and commercial lenders say. Easy for them--they are among the chief beneficiaries of the sub-prime fallout in the residential market! It's not that I have a problem with that advice. I've worked exclusively as a commercial and investment Mortgage Broker since I entered the business. However, if you're going to succeed, you're going to need real guidance.
Real guidance is what I aim to give you here.
In my experience, residential mortgage officers who choose to begin working commercial mortgages are often intimidated by the idea of working in a new field. They can also be somewhat uncertain about how to incorporate new business into their current practices. They lack confidence that they can truly serve their customers and don't want to risk developing a poor reputation. To combat these fears and obstacles, I believe you need the following three traits:
2. Determination; and
I define "desire" as your free choice in accepting roles in life. I don't believe that you should take on commercial loan brokering, or any new line of business, out of a spirit of desperation. You should want it. In other words, "if your heart ain't in it, your butt can't win it." You have no chance of winning any battle that you don't want to be in. If you can't look at commercial lending and want it, you should consider staying where you are and learn to compete better. If you're tough, competent and committed to being a productive loan officer, the good news is that a lot of your competitors are quitting the business altogether these days. More for us!
I define "determination" as freeing yourself of psychological and emotional baggage in your chosen role. You must let go of any hesitations, feelings of inadequacy or fears of failure if you hope to prosper. You can do it. Others have, and you're made of the same raw material that they are. Now, you must move past simple desire and decide that failure is not an option for you. If you're willing to put in the work, you'll make it.
I define "development" as making sure that you receive proper training in your chosen role. So what must you invest into the process? Here are my four keys to going commercial:
1. Learn the terminology;
2. Find a mentor and like-minded peers;
3. Go meet with lenders and learn their programs; and
4. Commit to training and development for the long-term.
1. Learn the terminology
One of the reasons that entering any new field is intimidating is that the people in it tend to use a lot of jargon and unfamiliar terms. Commercial lenders, borrowers and vendors don't speak the same language as their residential counterparts. Take the time to study trade publications such as Commercial Mortgage Insight and National Real Estate Investor. Pick up a copy of "Maverick Real Estate Investing" by Steve Bergsman. When you're talking to people and a concept goes over your head, ask your partner to explain it to you. They'll feel smarter, you'll be smarter and you'll be able to serve your customer more effectively.
2. Find a mentor and like-minded peers
I suggest that you search out people who have made the same career decision and get to know them. They are out there. Usually, if you approach people in other cities, they will be more receptive to helping you and won't see you as a threat. Find someone to swap stories with and share recommendations. They are out there. Also consider using free meals and Starbucks gift cards to cajole experienced professionals to share tips with you. A pancake breakfast can help you cut down on the number of times you stub your own toe.
3. Meet with lenders
This is the good habit that separates those who will last in this business from those who won't. Since commercial lending is still more of a face-to-face, relationship-oriented business than residential lending, you'll need to get in your car, get on a plane and wait in front of some receptionists to get a leg up. Ask people about their preferences and pick up tips on how to get loans through their processes. This practice will increase your close ratios dramatically. It's not only about having lots of lenders in your database. The lenders need to know you, too.
4. Commit to personal and professional
Real estate lending will continue to morph over the next few years as the market at-large matures, becomes more diverse and lenders continue to consolidate. Globalization is having its impact as well. Be sure to invest in yourself by attending conferences, listening to audio books, reading the local newspaper, enrolling in training classes and more. The leaders in any field are the learners.
If you'll follow these guidelines, you'll have a better-than-typical chance of getting good results from adding commercial loan business to your residential business without too much stress and disappointment. Who knows? You might enjoy it enough to make it your sole pursuit. At any rate, commercial mortgage brokering can be lucrative for you. I wish you great success.
Mark Anthony McCray, author of the upcoming book, "The 31 Rules for Succeeding as a Commercial Mortgage Broker," is the founder and CEO of Houston-based First Capital Mortgage Company and McCray Capital Partners. He may be reached at (713) 267-4040 or e-mail [email protected].