When should you use a commercial loan broker? When you’re frustrated with dealing with the incompetency and lack of follow through with your local banks, for starters. Time is money, it’s an old and over used saying, but it is true.
If you were able to have someone on your side of the table that has shopped banks for years, knew the in’s and out’s of underwriting, understood financial advisor brisbane which banks/lenders where still funding, and knew how to properly package loans, would it make sense to hire them?
How much does it cost a borrower in terms of money and time if they take their loan request to a bank and after 4 months the loan doesn’t close and they end up declining the file? Many borrowers are facing ballooning loans and will incur a technical default should they not refinance the debt in time. Having a default, even a technical one, is extremely damaging to financing the property in the future.
Borrowers want to avoid paying a commercial loan broker 1%, however they are used to paying commercial real estate brokers 5%… Many would argue that mortgage originators do much more work and have to have much more technical knowledge to get a commercial real estate loan closed.
Even if in less dramatic situation where the borrower is just considering saving time by working with a commercial loan broker, rather than going out and shopping banks and processing the loan on their own, it still makes a ton of sense to use a qualified commercial loan broker.
We see many borrowers make costly mistakes when they go out on their own. Hiring an appraisal company directly is a simple and all too often mistake we run into. Borrowers, after spending $3,000 on an appraisal are shock to learn that the bank/lender will not use it, as it is against the federal banking rules. Also, we see many borrowers that buy properties on a land contract, do so with getting any type of environmental studies done. They could be buying Chernobyl and not have a clue, because they want to save $2,000 on a property they dump $500,000 into.
Another component of this and a huge mistake borrowers make is that they send a loan request to a bank without knowing how healthy the bank truly is and what their specific appetite is for the type of loan submitted. This is difficult information to gather as the bank loan officer isn’t going to tell a borrower, “hey I think we have a 25% chance of getting this done.” The bank’s loan officer is most likely going to throw it against the wall and see if it sticks. Your chance of closing your loan will dramatically increase by hiring a commercial loan broker.