Commercial Magazine

Be the Referral Guru

There are many ways to find and keep a viable list of potential clients

By Rob Diodato

The ultimate goal of any commercial mortgage originator is to have an exclusively referral-based business. Getting there, however, can take considerable time and effort. And once you arrive, you can never have enough referral sources and must continue to find new ones.

Sourcing new loans can be the most challenging aspect of a commercial mortgage broker’s job. To get a steady number of referrals, the originator must be perceived as knowledgeable and an expert in commercial real estate finance, but you also need your clients to spread that word about you. Otherwise, your success will be limited.

What is the best method to source new deals? That depends on the commercial mortgage broker, but all originators should look at every transaction as a means to establish one or more referral sources. The typical purchase transaction usually involves Realtors, attorneys and a title company, as well as the seller and your borrower. Each party should be viewed as a potential referral source.

You should make it a point to correspond with each party and advise them about the financing process. Your effort will not only keep all parties abreast of what is happening with the loan, it also will demonstrate your expertise, knowledge and efficiency that will hopefully result in doing more business with one or more of the parties.

Commercial Realtors, especially, love a mortgage broker who keeps them in the loop. They appreciate an originator who will fight for their deal and protect their commission. This attention to detail will result in future business. Let’s face it, a referral is the best new prospect you can hope for as they come with an introduction from a party who was previously satisfied with your services. You have gained a certain level of trust, so the job of bringing in their loan is far less challenging. Your success rate in closing a loan with a prospect is far higher as a result. But this is not the only way to source new deals.

Most residential originators are quick to advise their colleagues when they have found a professional commercial mortgage broker who can deliver and make them look good in the process.

Residential connections

As a commercial mortgage broker, it is not uncommon to stumble upon your fair share of residential mortgages, especially if you offer a product line for nonowner-occupied residential loans. Residential originators also have commercial loans fall into their lap, yet most lack the knowledge or expertise to undertake a commercial transaction, or are unable to offer commercial real estate financing through their company. This means residential originators can be excellent referral partners.

As with your relationships with clients, it can take some time to gain the trust of a residential originator. A residential broker or lender may have had a bad experience referring deals to an unprofessional commercial mortgage broker. Once the relationship is established, however, it can be a wildly successful model to generate leads.

You should focus on building these relationships with seasoned, professional residential originators who can deliver good prospects. You’ll need to weed out the ones who can’t send viable loan candidates. What you will find, however, is that once you have gained the full faith and trust of a reliable residential originator, others will follow. Most residential originators are quick to advise their colleagues when they have found a professional commercial mortgage broker who can deliver and make them look good in the process.

Residential mortgage originators can contribute to your origination volume and enhance your other sources of new business. They have the ability to exponentially spread the word of your services, which can prove to be a valued source of future business for any commercial mortgage originator.

Using social media

There are other ways to find new clients. Social media can be a great way to attract new business. Sites designed for businesses, such as Linkedin, are great platforms. You are able to make new contacts with commercial real estate brokers and borrowers on the site. You can share information and content that may draw the attention of borrowers, Realtors or residential originators, as well as post details of your product offerings.

Social media allows you to reach the market you desire from your keyboard, without having to take one-on-one meetings or venture into an office with a box of doughnuts and some fliers. You are able to reach a larger audience whom you know have an interest in commercial real estate and possibly your services.

Online, fee-based platforms are available that provide an abundance of origination opportunities. Reonomy, for example, offers a service where you can research properties in a particular location, then obtain owner information and details on current financing, including the loan terms. It takes some time to mine for these contacts and then cold call or e-mail them. The pull-through rate will likely be lower, but it can still complement your other marketing efforts while leading to potential referrals or repeat business.

The use of e-mail marketing is another open avenue that a commercial mortgage broker should explore. Services such as iContact or Constant Contact enable you to create e-mail-ready fliers that can be distributed to your target audience. You can create lists of Realtors, residential loan officers, attorneys, etc., and market relevant material to them on a recurring basis.

This machine-gun approach allows you to reach a broader audience with the click of a mouse. You also can post the fliers on Linkedin, or any other social media platform that will generate interest in a particular product or program you have to offer. But you must be diligent and consistent, adding to and pruning your lists so that you get the best possible response. Keeping your name and your message out there will lead to new business, but you have to keep at it.

Keeping in touch

All of this leads to one final avenue for sourcing business: past clients. Unlike the insurance industry where you earn residual income each year a client stays in their policy, commercial mortgage brokers get paid once at closing. The most successful originators have made it a long-standing practice to maintain a calendar that alerts them when a prior client is close to the end of their fixed-rate term, regardless if the loan is scheduled to reset. Although many clients reach out directly as the anniversary of their loan approaches, you should make it a point to do so first.

Many clients don’t want to refinance and opt to allow the loan to reset, which is the path of least resistance. However, the broker is doing them a disservice by not letting their clients know about the other available options. The current interest rate environment may not always provide better options but, by contacting all your past clients, you are maintaining contact and deepening a relationship.

Although you may not refinance the original loan with every client, many clients will choose to refinance with you once the term expires. The original deal can become like an annuity, yielding revenue for your business every five, seven or 10 years. Also remember that most commercial real estate investors do not stop at just one property. You want them to think of you for any new property they plan to purchase.

One final word should be said about developing your referral-based business. There is no one-size-fits-all philosophy for sourcing new business. Some strategies will work for some, but not for others. There are many options for finding new business. The successful commercial mortgage broker always maintains a diversified strategy.


  • Rob Diodato

    Rob Diodato is the president of York Commercial Finance, a commercial mortgage advisory company with offices in Dallas and New York. Diodato arranges financing for commercial real estate transactions nationwide for all property types. Diodato has more than 26 years of experience in the commercial and residential mortgage industries.

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