Practice Broker Etiquette
When you are starting out as a commercial mortgage broker, there are some things you should know to have a better chance at success. Unfortunately, many new brokers break some of the rules early, which increases their chance of failure. To ensure that you're successful in this business, consider the following four dos and don'ts:
Steps
- Don't charge upfront fees. This is especially important if you don't have a funding source readily available. Without a funding source, don't have clients sign a service agreement and pay an upfront fee. Think about it: It would be like paying upfront for piano lessons when the instructor doesn't even know how to play the piano or where to find one. Charging upfront fees may indicate that you need the money as a revenue stream -- ultimately disclosing that you are not closing Avoid Unscrupulous Bad Credit Loan Brokers. In addition, charging clients when you don't even have a funding source that can meet their needs can lead to an ethical issue. Look for a funding source before taking on clients.
- Don't demand fees if you're the referring broker. If you don't have a direct relationship with a lender, there's a good chance you will have to co-broker loans to meet your clients' funding needs. And ultimately, the only Buy Mortgages entitled to a commission is the procuring broker. Referring brokers seldom get the amount of money the client agreed to pay initially. This may be because clients feel duped and question the validity of the service agreement they sign when the broker turned the file over to another broker who could and did perform. In addition, try to avoid creating a chain of brokers. Some lenders have seen projects that went five brokers deep -- and all the brokers felt entitled to 2 points each. This is simply not realistic, and most lenders simply will not allow it. To avoid a situation like this, there's a simple solution: If you don't have a funding source for the project, respectfully pass or wait until you do have one before having clients sign an agreement.
- Do know your projects. It shouldn't take you more than 20 minutes to review a file to determine whether you can fund it. If it does, you must find someone who can teach you what to look for. Good clients will give you everything you need to make a decision in less than 20 minutes. Clients who don't have this information readily available for your review might not always be worth the effort for a broker starting out. Great brokers also know how to present a transaction to lenders that immediately makes sense. A simple executive summary is essential. The executive summary you receive from your clients may have 10 times the information an underwriter or investor needs to make a decision to accept the file and review it in its entirety. Rewriting your clients' executive summaries also is an excellent way to get to know the project better and to discover any potential problems or obstacles before they become deal-killers.
- Do cooperate. Mortgage professionals must all work together in a spirit of cooperation to fund deals. In commercial finance -- especially in these times and with the dollars involved -- cooperation outweighs competition as the key to funding a loan. If you do the right things consistently, are always fair and honest, and realize the transaction doesn't revolve around you, then you are on your way to success as a commercial mortgage broker. Giving up half a point to close a deal doesn't make you weak. It makes you look better in clients' eyes and paves a rosy path for more funds and a successful career.
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