Value beyond expectations, that's why.
If you have ever thought about financing a commercial real
estate property, the thought of using a commercial mortgage
broker may have crossed your mind. However, if you are
like some people, you may have debated using a commercial
mortgage broker based on the belief that it is more
expensive to use a broker rather than go directly to a
lender. This common belief is a myth.
The reality is that there are a number of ways in which you
can save money by engaging a mortgage broker to provide you
assistance with your commercial real estate financing needs
and objectives. If you take the time to determine the value
of using a commercial mortgage broker you will surely see
that it is money well spent.
-Locating a Lender
Locating a lender to fund your commercial mortgage is not
as easy as it may seem. Due to the wide range of property
types, loan types, and special circumstances a single
lender simply cannot offer loan programs for all potential
loans. You may waste a considerable amount of time simply
trying to find a single lender that offers the program you
need. A qualified and experienced mortgage broker will
have multiple lender relationships in place who can offer a
wide range of lending options. Some brokers may even have
relationships in place that give you access to hundreds of
lenders offering an unbelievable amount of loan options.
-Risks in working with a single lender
You may spend the time and locate a single lender that can
meet your needs, but you are not out of the woods yet. By
working with a single lender or bank you are putting all
your eggs in one basket as they say. The approval process
can take a good deal of time that you may not have. Then
what happens if the loan application is not approved by
that lender? Can you afford to go through the process a
second time risking a similar outcome? By working with a
broker, your loan application can be submitted to multiple
lenders. This not only increases the chances that your
loan will be funded, but it also gives you and your broker
more bargaining power to get the best deal.
-Cost Variations Between Lenders
One of the most significant ways in which you can save
money by using the services of a commercial mortgage broker
rests in the fact that there can be notable differences in
the interest rates, costs and other fees charged from one
lender to the next. A broker will help you in identifying
the most reasonably priced options available from these
different mortgage lenders. On first blush the cost
differences from one lender to another may seem small. But
remember, in most instances we are talking about loans in
the millions of dollars. Even if the interest rate
difference is minimal on the surface, over time this can
add up to a significant amount of money.
-Brokers Specialize
Commercial mortgage brokers, especially the good ones, will
often specialize in a certain property or loan type. The
added experience provided by a specialist guarantees that
they have experience with exactly the loan you are looking
to secure. Each and every property type and loan type has
its own set of issues and pitfalls so it pays to find a
broker that services your individual needs. In comparison,
if you have a problem with your plumbing you want a
plumber, not a general contractor.
-Inherent Expenses of Searching on Your Own
People tend to forget that when they are devoting time
shopping around looking for a commercial mortgage lender –
or anything else for that matter – it takes you away from
other pursuits, including money making pursuits.
Therefore, you do need to keep in mind that by engaging the
services of a commercial mortgage broker you free up more
of your valuable time to engage in other efforts that are
more profitable than aimlessly wandering around looking for
a mortgage lender.
-Support Services
Another avenue through which a commercial mortgage broker
can help you save money is through their existing
relationships with other industry professionals. A good
commercial mortgage broker has a preassembled network of
professionals including appraisers, accountants, lawyers
and other service providers that they work with on a
regular basis. Not only do you not have to spend the time
to find these required resources on your own, but often
times you can get a reduced rate on the services due to the
brokers existing relationship.
-Fees of Commercial Mortgage Brokers
You need to understand that commercial mortgage brokers
appreciate that they are in a very competitive business.
Therefore, these professionals are now taking great pains
to make their services as affordable as possible. Don't be
afraid to negotiate the broker fee. And don't be afraid to
ask your broker questions regarding how they came up with
the fee proposal. The good thing about using a broker is
that they do not get paid unless your deal closes.
It is true that in the end, you do pay a fee for utilizing
the services of a commercial mortgage broker. These fees
can range from half a point to two points on conventional
loans up to five or so points on a hard money deal.
However, you will find, as many commercial investors have
in the past, that working with a commercial broker will
help ensure that your needs are met and that you get the
best deal in the process. The bottom line is that what you
are paying for is a professional on your side, someone to
watch out for your best interests. Similar to the way a
lawyer protects your interests in legal matters. You
wouldn't go to court without a lawyer, so don't finance
your commercial mortgage without a broker.
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Contributed by: Patrick Bedall, Vice President, VEC
Financial Group. The VEC Financial Group (VEC) was created
to solve the problems facing mortgage brokers and to
provide the tools, support, and clients required to be
successful. Together with the Commercial Real Estate
Investors Network (CREI) we are changing the commercial
finance industry.
VEC FINANCIAL: VISION-EXECUTION-COMMITMENT
http://www.vecfinancial.com
