Hearing what your client is really saying during the application stage is crucial to funding

Andrew Bogdanoff, president, Remington Financial Group

As published in Scotsman Guide's Commercial Edition, November 2008.

For commercial mortgage brokers, listening is a vital skill. When considering a business deal, brokers should interview their clients directly during the application process.

In this phase, listening carefully is important while gathering information about what a client has done in the past to secure funding for a particular deal.

Listening to answers about past efforts to secure funding is important for two reasons. First, brokers can use this information to determine the best loan type to secure. Second, clients may not be completely honest when answering this question.

Because the first information borrowers provide might only be brushstrokes of the real answer, brokers must be on their toes to spot any discrepancies.

The fact that borrowers are talking to a broker may be a clue that they have tried other routes to secure funding for their commercial deals. It makes sense for a client to first visit a banking partner to fund a new business deal. Why would clients be willing to pay a brokerage fee if they haven't explored fee-free options?

By really listening to clients' answers, brokers can start piecing together the previous-attempts-at-funding puzzle.

The confession

Brokers should consider that the information borrowers initially provided about funding efforts have been embellished. Good brokers rely on a combination of what they hear and what their gut tells them to determine when clients are telling the truth. Brokers should push for more data if they feel that accurate information is not being provided.

One way to approach borrowers is to ask them what about the deal would make a lender reluctant to provide financing. Because there are downsides to every deal, borrowers should be able to provide some thoughts. If they cannot, continue to ask questions.

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