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   ARTICLE   |   From Scotsman Guide Commercial Edition   |   September 2007

The Virtue of Sharing

Referring deals outside of your expertise to other brokers makes good business sense

The first thought many brokers have when a loan opportunity arises is, “How many points will I get?” This can lead to situations in which four to six brokers seek payment for minimal contributions they’ve made to loans they know little about.

Almost everyone suffers from this approach. Lenders shy away from the transactions because of the complexity and lack of a central broker contact. Borrowers’ loans remain unfunded. And brokers end up with nothing to show for their efforts but stacks of photocopied loan documents and wasted time.

Brokers also lose professional credibility when they’re involved in these daisy chains. It doesn’t have to be this way.

Referrals can be the answer.

Learn from the lawyers

Lawyers have long recognized the value of referrals. When their caseloads exceed their capabilities, they refer prospective clients to other attorneys. The same is true when a client appears with a case that requires another specialty; attorneys refer it out. Not only that, but they also do so without referral fees or point claims. It’s simply a matter of professional courtesy.

And lawyers do well from the process — not from the cases referred out but from future cases referred in as a result. Brokers and lenders can benefit from this model, as well.

How you benefit

Brokers often put unfamiliar loan scenarios at the back of the queue. They tell borrowers that they’re seeking lending outlets, but in the meantime, they’re actually attending to easier, more-familiar loan scenarios.

If they instead take the almost-counterintuitive approach of giving away a loan to another broker, they’ll save on the most valuable and irretrievable asset: time.

Trying to work deals on unfamiliar and complex property types saps time that could be better spent soliciting fundable loans. It can also cause brokers anxiety and decrease success rates. It’s a true lose-lose scenario, costing time and credibility.

Providing a referral, on the other hand, is simply a sign of professionalism. It identifies you as an individual with an established niche who knows your stuff and is too busy doing a good job to dabble in other areas. It also helps you develop a network within the industry.

For newer brokers, referring loan opportunities —those that are hard-won and those that simply arise — to more experienced brokers often guarantees two things.

First, you’ll be exposed to important contacts in other niches, which could put you in a better position to take a more active role in subsequent loans of this type.

Second, you’ll likely receive referrals for smaller loans that more-experienced brokers don’t think are cost-efficient or interesting enough to perform themselves.

Focus on the end goal

Identifying referral sources requires a rare focus on the industry and on the people in it. Having this knowledge can set you apart.

In the world of mortgage lending, only one outcome matters: speed. Get the deal done.

Savvy brokers and borrowers focus on time, not cost. A broker’s primary focus has to be how to complete each loan quickly.

Connecting the right loan with the right lender swiftly and efficiently is the objective.


 


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