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Tools you can use
Many tools exist to help brokers easily spot loans that cannot be closed. Reports from data providers, for example, typically cost a nominal fee and are invaluable for quickly identifying possible issues with loans. Providers offer reports that show key pieces of information on a property, including:
Last sale date: One can look at this report to see if the property has recently sold. If it did, the sale price is a good indication of the property’s current value. A property purchased two months ago for $200,000 is likely not worth $1 million today.
Last-recorded mortgage: This report typically gives the amount of the last mortgage recorded on the property. This information enables brokers to ask borrowers the right questions. For instance, if borrowers claim that they own the property free and clear and a mortgage was recently recorded on the property, a broker can ask to see documentation that the lien has been satisfied.
Tax value and comparable property sales: These two pieces of information give a starting point for the valuation of the property. If every comparable property nearby is selling for less than $200,000 and the borrower states that the subject property is worth $900,000, one should question the value.
Another source brokers can turn to is their county’s property assessor’s office, many of which list their information for free online. Assessors can offer information similar to that provided by data providers, but they sometimes offer a less-user-friendly search format. This can require more effort for brokers.
There are also a number of online listing services. Many of these Web sites specialize in commercial listings, and most are free to search. They enable brokers to see all the properties for sale and for lease in the area. This information can provide a good indication of a property’s value.
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To maximize the profitability of brokering commercial loans, mortgage brokers need to identify loans that fall into the “uncloseable” category and avoid them like the plague. This will enable astute brokers to focus on profitable loans that have a much greater likelihood of closing.
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