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According to the National Association of Realtors, foreign investors alone are expected to deploy $58 billion into the U.S. commercial real estate market between 2016 and 2020. Of course, optimism is always strong until the market changes. Given
the strong loan-volume forecast, many are wondering if the market will continue this uphill course, or if forthcoming political and market pressures will
have negative consequences on future commercial real estate financing.
Additionally, there are questions about whether recent retail-sector
headlines, possible overexposure in certain sectors, rapid growth in commercial
loan concentrations, detected weaknesses in risk-management practices
and increased equity requirements in high-volatility commercial real estate
(HVCRE) loans will possibly result in a general lack of economic confidence
and a market downturn.
There are countless commercial lenders in the U.S. offering myriad loan
programs. Loan-compliance standards are high, documentation is voluminous,
and the entire process is complex and time-consuming. Many buyers or
investors do not have the time to navigate the lending process and are generally
uncomfortable without professional guidance. This is where the mortgage
broker comes in.
Successful commercial mortgage brokers are industry thought leaders who
have in-depth market savvy, recognize opportunities when the market
changes and are unafraid to take on challenges during periods of chaos. They
are always action-oriented.
One of the best definitions of a thought leader comes from Robert Jarvik,
an American scientist who helped develop the first artificial heart: “Leaders
are visionaries with a poorly developed sense of fear and no concept of the
odds against them.” When working with lenders and clients, commercial
mortgage brokers should constantly stress the many ways they can add value
to a deal, including:
■ ■ Eliminating the potential risk of dealing with a single lender;
■ ■ Providing a solid network of professionals, including accountants,
appraisers and attorneys that the broker works with on a regular basis;
■ ■ Helping a wise business person access the right financing, just as a wise
business person wouldn’t enter a courtroom without the right lawyer;
■ ■ Leveraging lender relationships to secure an accelerated processing
of the loan application, and;
■ ■ Navigating the commercial lending world, similar to a sponsor in an
Nearly all successful mortgage broker operations have a defined path to
follow. Following are four areas in which brokers may be able to “future-proof”
their business and guide themselves past potential economic challenges.
Generally, strategic planning is more holistic in its approach, focusing on
things like company vision, mission and values. Essentially, these are specific
strategies to use in order to achieve desired goals and objectives.
Strategic planning shouldn’t be confused with other types of planning,
which are usually more tactical or specific steps to be taken. With a strategic
plan in place, a company can be more proactive to certain events, as opposed
to simply reacting to events that cannot be controlled.
A strategic plan will help a company recognize new opportunities, identify
better choices, appropriately allocate its resources and help ensure all staff
members are in sync. Even an average plan, if well executed, can produce
There is rapid growth in online lending platforms, or internet-based lending,
which offer a variety of loan types, including commercial real estate loans.
These websites offer borrowers avenues for accessing capital and emphasize an
accelerated approval process. These sites should be considered major forces of
change. They are a mortgage broker’s competitors, both today and tomorrow.
Advanced data, or big data, is a force multiplier and will extend service capabilities and delivery systems in vital ways. Data is changing the business world
— either one stays on top of it or falls behind and risks becoming irrelevant
in the marketplace. Technology spawns innovation which, in turn, provides an
opportunity for brokers to stand out from their competition, if they utilize
strategies to create a competitive advantage in their respective market.
Technology can best serve a mortgage broker in three ways. First, they can
build a convincing social media presence to increase name recognition and
encourage potential new clients to review their menu of loan offerings. Second,
they can provide an easy-to-access loan-application process. Third, they can
provide an automated-under writing program to qualify the potential borrower.
Automated-underwriting engines provide immediate loan decisions
based on information submitted at the start of the application process.
By focusing on these three areas, a mortgage broker can speed up the entire
loan process from origination through underwriting — and that means
getting paid faster.