3 Dec

Why use a commercial mortgage broker?


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Commercial real estate owners and purchasers have a choice to make when it comes to financing their real estate investments. They often wonder “Should I apply to my local bank directly, or should I employ the services of a professional commercial mortgage broker to assist?” In order to answer this question, the following points need to be considered:

►How many transactions does the borrower handle in the course of a year?

Most real estate owners purchase, sell or refinance a very limited number of properties in the course of a year. By contrast, an active and competent commercial mortgage broker will handle dozens of transactions in the same time period. The commercial mortgage broker will understand the current lending environment, market conditions, and underwriting guidelines, all of which are constantly changing as the market goes through its typical cycles.

►How many lenders does the borrower engage with during the course of a typical year?

Most real estate owners have relationships with several local lenders in their market. A commercial mortgage broker typically deals with a wide array of local and national lenders every day. These include: banks, insurance companies, pension funds, credit unions, government agencies, and private lenders. A good commercial mortgage broker will know which lender is the best choice to handle the given transaction.

►Is the borrower up-to-date when it comes to current deal structures?

Many borrowers focus only on the interest rate. A commercial mortgage broker will help negotiate many other deal points, including: Maximum leverage, loan term, amortization period, recourse obligations, pre-payment penalties, closing conditions, post-closing and/or annual requirements, etc.

There are many moving parts in a commercial mortgage transaction and a commercial mortgage broker will be able to negotiate the best deals for his clients.

Most large real estate investment firms employ in-house financing professionals to source, negotiate and place their commercial mortgage loans. It is often cost prohibitive for smaller firms or individual investors to employ financing professionals on a full-time basis. These investors are best served by hiring a competent commercial mortgage broker to represent their interests on a deal-by-deal basis.