Good Manners Count
By Christopher Perez
Copyright ?2005
If you are serious about making a splash in
the commercial finance world it is vital that you read and absorb this article. It is obvious that your reputation with your
borrowers is of utmost importance, but what is sometimes lost on brokers is that your relationship with your lenders is every
bit as important if not more so. Please take this to heart, good manners count. There are over 30,000+ brokers out there,
but believe it or not the commercial wholesale world is quite small. Every major player knows every other major player. They
mix worlds at times. They sit side by side at tradeshows. They buy one another or merge at times. They even refer deals &
brokers. The converse hold true as well. They also discuss the bad brokers out there. If you make a negative name for yourself
with just one wholesale company you may be significantly impacting your shelf life across the industry. This article is designed
to help you avoid the pitfalls of the unsuccessful commercial broker.
First is the sloppy submission. The refi boom
is becoming a distant memory so many brokers are crossing over into commercial which is very logical. This means that commercial
wholesalers are having their very own industry boom. Deals are coming in fast & furious. The ones that get attention and
are qualified quickly are the ones that are prepared and submitted the proper way. Handwritten 1003’s are a no-no. They
go a long way to put you in the category of the unprepared broker. Most lenders will not even accept them. Now when you resubmit
the second time your file will go to the bottom of a very large pile.
Submitting incomplete information. If a lender
says you need to submit a 1003, tri-merge, and rent roll submit: 1003, tri-merge and rent roll not just the 1003 & tri-merge.
1003’s are your one opportunity to paint a picture of your borrowers for the lenders. This means the more information
and assets listed the more favorable decision you will receive. This is important not only for full document loans but for
stated as well. Stated does not mean no information needed. Submitting a barren 1003 will only get the file sent back to you.
Now when you have to submit your file again it is now under the microscope of the underwriter the second time around. Get
it right once. Ask your account executive or AE if you need guidance on what is desirable.
Submitting information
that is not requested is just as bad as submitting not enough information. If a lender tells you to send 1003, tri-merge credit,
& rent roll, you send: 1003, tri-merge, & rent roll. You may think you are being helpful by sending in a complete
file which may include tax returns, purchase agreement, leases, appraisals, etc., but all you are doing is bogging down your
AE. In fact some of this information needs to go to separate departments at separate times in the loan cycle. What is even
worse is that it may go to the underwriter with excess information. The underwriter has the ultimate say on whether your deal
is a go or a no go. They do not like doing unnecessary paperwork. If you make them have to disseminate through a bunch of
information that is not needed in the beginning for a prequal you can be assured if the deal is a go they will punish you
with stips down the road. Once you are on an underwriter’s bad side your files get special attention & not the kind
you want if you want to close deals.
Sending dated information. If you have an old file that came back to life update
the information. Re-pull credit, get current tax returns, or an up to date P & L.. You will save time in the long run.
Deal blasting. This is when a broker faxes or e-mails out the same deal to multiple lenders. It is ok to shop for
the best deal for your borrower, but you want to be very upfront with your lenders that you are doing so. If they see the
deal is going to multiple sources you may not get back a serious offer & the turnaround time is going to be very slow
on your files. In addition some lenders will re-pull credit. If credit is pulled too many times it will adversely affect the
chance of your borrower getting a loan. Also nobody wants an unsolicited fax of 50 or even 100 pages so call your AE first
to discuss the deal. After a 1 minute conversation you may find out you do not have a deal at all. I have personally seen
50 page faxes go right into the shredder because no one was expecting the deal. Wholesalers have many employees so you always
want to speak with someone before sending. Deal blasting shows that a broker does not know his wholesalers or their programs
well. If you don’t know the programs it could mean you don’t know how to put together files which could in turn
mean you don’t know your borrowers.
Submitting unrealistic or garbage deals. Let me dispel the myth right now,
100% financing in commercial doesn’t exist. There are unique circumstances when you can get close or create a scenario
where it ends up being 100% but it is a rarity. Borrowers with sub 600 FICO scores will not get good rates, ever. Bad credit
borrowers can not purchase property unless they are putting up a ton of money to the tune of 50% or more. You must have fair
credit with down money to purchase commercial property, period. Someone looking for 100 million dollars with no equity or
down money lives in a dream land where elves exist. No phone no loan. Always ask yourself would you personally put up your
own money on your borrower. If you consistently send bad deals to lenders you will lose credibility plus no one will want
to work with you.
Having unrealistic expectations of your lenders. If the lender says approval in 48-72 hrs do not
call 5 times the day after submission to check on the file. Some lenders evaluate as many as 50 deals per day so you have
to get in line. Be patient. If you have a rush deal let your AE know in advance, but do not be a bull about it. If the borrower
is bullying you, you must not let that carry over to your lender. It will affect your deal. If the lender says close 30-60
days, expect 60. Do not over promise your borrowers with unrealistic turnaround times or offers. If you under promise and
over deliver you will go far, increase your referrals, close more deals, and have happier borrowers.
Just plain old
being rude or arrogant. You would think that this simple rule would be universally understood, but for some insane reason
it isn’t. This is vital for you as a broker to understand. Your lender does not have to work with you or accept your
deals. This is so important I must say it again, your lender does not have to work with you or accept your deals. Being the
CEO & president of your firm, driving a Porsche, and like are great accomplishments, but better left to the locker room
or golf course. You lenders are there to get your borrowers the best wholesale deals available & hopefully in the process
make you lot’s of money. If you are arrogant or rude you will then be instantly sent up the food chain to a senior person.
This is not because you are getting VIP status. It is because you are being carefully evaluated. If you are continually disruptive
to the wholesalers business they will black list you. This means you can no longer submit deals to them. What is worse is
that some wholesalers have the same parent companies & sister companies. You will be banned from all of them. I know of
a situation where a broker called and left a message for a lender. The lender rep called back & was immediate place on
hold. The rep was extremely busy so left a message and took the next call. The broker called back 25 minutes later to speak
with the loan administrator of the company. She said she wanted to be removed from any & all solicitations plus taken
off of the approved list because the rep didn’t wait on hold. The administrator was amazed at this request because this
was typically only done by the lender in the case of fraud or some extraordinary circumstance. The administrator obliged at
the brokers request. The broker in effect banned themselves from doing business with 15 companies. How much money that cost
the broker in the long run is immeasurable. This was a case of arrogance costing a broker a lot of money. Being rude &
belligerent is also completely unacceptable no matter the reason. Everyone has off days, especially when deals go south, so
you may want to lash out. Do not let emotions impact your income. The good news is that lenders want to help you & your
borrowers. They want your business. If you are courteous, even friendly, you can build some long term relationships that will
be emotionally as well as financially rewarding which is exactly what this business should be about.
Christopher Perez
advises over 1500 brokers on a daily basis.
Christopher Perez is the director of Commercial Loan Consultants, a national
commercial-loan-placement firm. He advises more than 700 residential brokers nationwide. In addition, he provides a comprehensive
training program for residential brokers looking to branch out into commercial-loan origination. Contact him at (877) 473-6984,
e-mail
[email protected] or visit
www.clcloans.net.
Posted by Commercial Mortgage Group at 1:20 PM
Updated: Thursday, 9 February 2006 1:23 PM
