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   ARTICLE   |   From Scotsman Guide Commercial Edition   |   March 2016

Referral Networks Are the Cornerstone of Business Growth

Good relationships build on one another to boost your client base and revenue

One of the most important factors in the success of any commercial mortgage originator is the ability to fully develop a referral network in order to close more commercial real estate loans. Without a steady flow of loan scenarios, you won’t be able to close deals and increase your business or your income.

So, what do originators need to do to take their business to the next level? First, successful loan originators must recognize that their best business comes from referral sources — bankers, lawyers, accountants, prior customers and every other contact that they have. 

This means that developing business through the creation of long-term relationships is the best way to increase volume and earnings. The more originators expand their referral networks, the more successful they will be.

Find reliable lenders

As an originator, the cornerstone of building your referral network is to have dependable lenders that will be able to close the loans you submit to them. When a loan doesn’t close, not only has your client not been able to purchase or refinance a property, but in many instances, they have lost the money they spent for third-party reports or wasted critical time.

Your client and your referral source both depend on your expertise as a mortgage originator to get their loan closed. This delivery is what you get paid for. You need to know that working with lenders that can’t close loans because of changes in their guidelines or inconsistencies in their sources of funding can, and will, have a negative impact on your reputation. When selecting a source of financing, it’s important to verify that you are dealing with a direct lender. Use industry tools to select a verified lender, preferably a variety of direct lenders. Make sure you look for lenders that have stood the test of time and have an established track record of closing loans under the terms you are quoted.

The greater the number of reliable lenders you have, the more financing options you can provide to your borrowers. Your list of lenders should include local banks, insurance companies, nonconforming lenders and hard money lenders. Also, keep in mind that some lenders offer their loan originators marketing support at no cost. This can be an invaluable tool in helping you develop effective marketing materials to reach out to your network.

As a mortgage originator, you already have a referral network in place, but you might not realize how extensive that network really is. You need to understand that this network includes not only those who have already referred business to you, but every contact you have on Facebook, LinkedIn, Twitter and other social media channels. When you stop and count all of these contacts, you will probably be surprised by the size of your existing referral network.

Once you grasp the importance and size of your network, you need to understand how to get the word out. This involves letting those in your current network know that you can help them place, and close, commercial mortgage loans. A simple first step is to make sure that you include the word “commercial” on your business cards and other marketing materials. This easy step will let customers and potential referral sources know that you are an expert in commercial mortgages and help enhance your reputation. Make sure you mention commercial transactions in your social media postings. Follow industry publications and blogs and join industry groups. These simple actions will enhance how potential referral sources see you.

Make sure bankers know that you are not only looking
for referrals, but you also are hoping to send them referrals.

Once you’ve put the word out to your existing referral network, it‘s time to begin expanding that network. Set aside time each week on social media to refine your profile and, most importantly, connect with new potential clients. Posting your successes, or offering industry tips, will get you noticed and expand your referral network. You also will see that many lenders are active on social media themselves, which will help you to connect with additional funding sources.

Branching out

The next step in developing your referral network is to review the list of those who have referred business to you already. Look at their occupations or industries to see if this is an arena you can develop further.

Remember, also, that referring business is a two-way street. Think about how excited you are when you get a referral and how you remember the person who sent the connection your way. If you can refer business to your sources, they will be more likely to refer business to you.

This concept also applies to where you do business. Visit the banks you have accounts with and connect with the commercial loan officers at those institutions. Local banks are a great place to start building your referral network. Banks consistently turn down requests from borrowers because they don’t meet the bank’s guidelines. Not only can professionals at these banks refer you potential nonbankable deals, they also can be a valuable source for your bankable borrowers.

Once you approach your own bank, ask them to help you make contacts at other area lenders. Make sure these bankers know that you are not only looking for referrals, but you also are hoping to send them referrals. As you get to know more of the bankers in your area, you will become familiar with what type of deals each bank is looking for and which loans can be placed where.

In addition to helping the commercial loan officer at your local bank, you also can assist the bank’s workout group. Every bank has loans on their balance sheet that no longer meet underwriting guidelines and that the institution would like to get off of their books. As a commercial mortgage specialist, you recognize that if these loans are not performing at one bank, there is a good chance that the borrowers who hold them won’t be able to get financing at another bank. This is where you can shine. By using the network of nonconforming lenders you have developed, you can take these borrowers to lenders that can provide financing. In this instance, you have helped the bank and the borrower — and both are likely to recommend you to people in their networks.

Focus on professionals

Another way to expand your referral network is by reaching out to accountants or lawyers. They know who needs to borrow to pay off tax liens, balloon payments, judgments or other debts. They also understand that some of their clients are unable to qualify for bank financing, but may not know where to send these clients. Because you are an expert in commercial mortgages, you can be their go-to source for financing these clients.

Don’t forget about your local Realtor network. How many Realtors have lost a sale because the buyer wasn’t able to qualify for conventional financing? Many of these buyers have the substantial downpayments, but need to finance the balance. Some may be self-employed or have other reasons they can’t qualify for traditional financing. This is where you can step in to help. With your network of nonconforming lenders, you can provide a lender that can get the transaction done. What better place is there for you as a mortgage originator to come to the rescue? These Realtors will not only recommend you to their colleagues, but provide an introduction as well.

•  •  •

All the tools you need to further develop business from your referral network and to grow that network are right at your fingertips. First develop solid relationships with direct lenders and then let the market know what you can do. Expanding your referral network will increase the amount of commercial mortgage business you close each year and thus increase your earnings.  


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