The commercial mortgage space is brimming with opportunities, but too few brokers ready to take advantage of them.
Opportunities abound, the commercial space is more demanding than residential brokering. According to Greg Vorwaller, president of Trez Capital, that doesn’t mean it cannot be done. Trez is a regular in the broker channel and Vorwaller has a few tips to share with curious brokers.
“If, in fact, they have the right skills and can convert their ability from the residential to the commercial side, the distinction from the commercial side is that your customer base tends to be more sophisticated,” said Vorwaller.
“So the mortgage broker has to possess the financial, analytical, and underwriting skills needed to position a commercial mortgage loan opportunity they’re brokering in the right way to garner interest from firms such as ourselves that do look at commercial loans through the broker channel.”
Brokers who try their hand in the commercial space are cautioned to be aware of how much more credibility is sanctified. Vorwaller recommends associating with a firm renowned for its quality of work in the commercial space.
“You automatically give yourself some credentials that will enable you to open up doors to opportunity,” he said. “We’ve also seen some people on the residential side move to commercial firms so that they are associating themselves with people with experience. They work with them to gain the experience and have the credibility factor of being affiliating with specializing in commercial mortgage brokerage.”
According to Money Solutions’ owner and principal broker, brokers and agents in the commercial space are dwarfed by the seemingly oversaturated residential side. However, therein lies opportunity.
“I’ve been teaching my own agents to try to focus more on the commercial construction side because the number of agents doing this is very small,” said Paul Soni. “There are a number of clients out there who need refinances. Some of them already have mortgages with their present institutions but they’re not getting extra money from them, so people need equity take out as well. Lenders have new programs out for commercial clients, like HELOCs they can use for business purposes. There’s a lot of good stuff out there that agents can use to diversify themselves.”
According to Soni, the number of experienced commercial brokers is so meagre that a lot of deals fall apart. But that, too, presents opportunity.
“I get quite a few deals from other co-brokers too, even the bigger ones,” said Soni. “A lot of them don’t have the right people doing commercial mortgages, or not enough experience, so they end up losing the deals because they don’t know how to structure them and they need some guidance for them.”
Comportment is an additional consideration on the commercial side, as well. Soni often accompanies his agents to meet clients.
“They work as a team. It looks better to the client if they’re working with somebody more experienced. Agents are usually more comfortable talking to residential clients because they’re just normal clients, but when you’re talking to someone about a construction deal, you have to talk to them like a business person. Agents need to be taught the confidence.”
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