As published in Scotsman Guide's Commercial Edition, March 2007.
Imagine that you walk into a department store and ask a sales associate for help finding a shirt. The salesperson offers to check the back room -- an impressive customer-service move -- only to return 20 minutes later with only the directive that you look elsewhere.
As commercial brokers, we sometimes fall into the same trap. We know we can get what borrowers want, but we cannot always get our hands on it right away.
We must stock our "virtual shelves" with loan products that we know intimately and that fit our customers' needs.
One way is to interview our lenders regularly. This gives us up-to-date information about each lender and the specific products it offers.
The following questions can help open the conversation when you meet with lenders. As you work through each question, you can drill down deeper to find out what you need to know.
What types of properties do you fund, and what properties do you prefer to have in your portfolio?
What loan programs do you offer?
Do you offer recourse or nonrecourse loans?
What are your maximum loan to values and loan amounts?
What debt-service-coverage ratio do you require?
What are your fees and prepayment penalties?
Do you have lock-outs or yield-maintenance requirements?
How do you handle appraisals?
What types of third-party reports do you need?
What is your geographical lending area?
Ask lenders what they want and how they want it. By doing so, you show your professionalism and demonstrate that you will deliver a quality loan that fits within their guidelines. After all, lenders often feel like brokers are throwing the proverbial spaghetti against the wall and hoping it will stick.
Interviewing your lenders on a regular basis helps you develop relationships with them. Remember, you are working with people, not just big institutions. People do business with people they know and trust.
Doing your homework about your lenders and having a comprehensive knowledge of their loan products helps you better serve your customers.
For example, lenders sometimes discover that their portfolios have too much of a certain property type, loan type or geographical concentration. The result is that they may suddenly change their appetites.
But if you have developed a rapport with your lenders, you may find out this information sooner than your competitors do.
This is vital information for you to know when meeting with a client who may be looking for a specific loan. Knowing these changes before the meeting will help you prepare an appropriate loan presentation that will allow you to deliver your loan on time and as promised.
Borrowers will also see that you're well-prepared, and they probably will be more comfortable with you as you lead them to closing.
Each lender you interview will now be on your virtual shelves. When borrowers approach you, you can pull the loan programs off the shelves and exceed their expectations.
Use the interview process to become the best provider possible.
Dale Palsson is president
of Lighthouse Commercial Finance, a commercial mortgage brokerage with offices in California, Washington state and Utah. In the past 21 years, Palsson has focused on the needs of his clients in all aspects of real estate lending and investing. You can reach him in his Walnut Creek, Calif., office at (925) 208-3014 or at Dale@Light houseCommercialFinance.com.