At a Glance
■ What are the bank’s current portfolio needs?
Following is a partial list of
questions a commercial mortgage
broker should ask a lender
■ What are the new initiatives currently happening
within the bank?
■ What is the lender’s ideal loan size and desired
■ What are the bank’s preferred loan types
(i.e., acquisition, development, construction,
■ What are the lender’s geographic market
■ What is the bank’s attitude on dealing with
Continued on Page 76 >>
Garry Barnes is a director of PW Partners Consultancy. He’s
a former bank CEO and president who currently serves on
the board of directors of Holladay Bank & Trust in Salt Lake
City. He taught at the university level, is a writer and lecturer
on banking and real estate matters, served on the U.S. Small
Business Administration’s National Advisory Council and
was an in-country consultant to the Central Bank of Russia.
Reach Barnes at (619) 791-9403 or firstname.lastname@example.org.
Success Is Built One Deal at a Time
Focus your energy in the mortgage business on going from good to great
By Garry Barnes
You have already made the career decision to become a commercial mortgage broker. You have secured your license, established a physical location or an online presence,
have business cards, letterhead and, most importantly,
you have the heart of an entrepreneur.
You want to be self-employed, the architect of
your own future, with unlimited potential income. To
achieve your objectives, you have to recognize or do
■ Uncertainty is your new normal;
■ Accept your reality;
■ Build opportunity by producing value;
■ Focus on the future; and
■ Never stop learning.
Be action oriented
In a nutshell, a commercial mortgage broker’s future
is about “doing things.” That means nothing happens
until the sale is made, the transaction is closed and you
In addition, mortgage brokers must recognize their
three most important assets: time, knowledge and the
commitment to succeed. So, never miss an opportunity to gain from your experiences and never quit. Never,
ever, ever quit.
There are many moving parts to this business, however, and among the top concerns are money sources,
or lenders. Mortgage brokers are paid on commission
based on the loan amount sought by the borrower
and granted by the lender.
Operating a mortgage brokerage business can be
very gratifying and very financially rewarding. It can
also be a constant battle, if the broker develops certain
bad business practices.
These shortcomings will encumber a broker’s ability
to close transactions and also limit the broker’s ability
to grow business. These shortcomings include the following: chasing the wrong loans, not identifying and
understanding a lender’s preferred loan products, trying to make too many exceptions to loan policies and
not having a fee agreement in place.
Mortgage brokers must continuously seek new ways
to distinguish themselves in the market. A broker who is
also a skilled under writer, for example, can assist the borrower in navigating the funding process with the lender.
Another key to success as a commercial mortgage
broker is to develop a funding source for just about every
loan product you choose to offer. Developing funding
sources is an effort without a finish line.
Develop a network
Many lenders are constantly changing their portfolio requirements and risk profiles. This is not to
suggest that lenders are indecisive or erratic, however. It must be understood that lenders are highly
regulated and operate in a constantly changing
One day a lender will eagerly accept a retail transaction, the next day a wholesale deal, and the next
day both are unacceptable. These policy changes may
be a result of the bank being very liquid and willing
to overlook many flaws. Or, the changes could be the
result of the lender’s loan portfolio concentrations,
or because it was criticized by a regulator, or it could
stem from a negative article in the newspaper about
the economy. Commercial real estate lending is, frankly,
very subjective and constantly in flux.
The key to loan-volume success as a mortgage bro-
ker is to identify a range of lenders who are actively
lending today. Further, keep in mind that there is a
common belief that has a degree of truth: 20 percent
of real estate loan officers do 80 percent of the loans.
Consequently, a savvy mortgage broker should identify which lending officer is doing the most deals and
work hard at developing a strong working relationship
with that individual and financial institution.
Before starting to develop banking relationships,
it is appropriate for the mortgage broker to identify
which loan markets to actively pursue. Frequently, a
broker that has developed a niche may have more success than a generalist. But that is a strategy unique to
the individual broker, and their area of expertise and
interest. In any event, the broker will need a sizable
number of lenders that are ready and eager to finance
the loans sourced by the broker.
Narrow your plan
What is a sizable number of lenders? Well, that depends on whether you are a generalist or a specialist. A
generalist will attempt to do almost any type and size
of deal that comes along. A specialist has developed
a niche and specializes in two or three specific loan
products — construction loans, for example, or perhaps owner-occupied commercial buildings, or maybe
The generalist will need as many contacts and banking relationships as can be developed. This will, of
course, require considerable time and effort. Maybe
this time and effort could be better invested by narrowing the business strategy, which will reduce the
need for so many lender relationships.
A successful mortgage broker will frequently stand
out as a specialist. If a particular market is stronger and
more active, the broker may wish to emphasize that
niche as their primary focus. If the broker’s lending
partners have a particular focus, then that niche, too,
could become an area of shared emphasis.