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Of course, technology can be expensive to install, use and maintain. The
question is whether a mortgage broker can attract enough qualified borrowers to justify the expense associated with the enhanced technology. Brokers
should keep in mind there will always be potential borrowers who prefer to
engage in person or over the phone. For the foreseeable future, these clients
will remain an important part of the market. Yes, these individuals require
more time and are more expensive to process, but brokers should accept the
fact that not all clients are ready to interface with a computer alone.
Technology also has a major impact on a mortgage broker’s location. With
the right technology, a client’s need to visit a broker’s office is greatly reduced
and may be eliminated altogether.
An active broker must have a substantial number of lenders that are willing
to finance the various loan types sourced by the broker. There is no optimal
number of lenders but — arguably — more is better.
If a broker offers niche loan products, lenders must also have a degree of
expertise and be willing to lend to that market. The loan types offered by a
broker will generally dictate the number of lending sources needed. A general broker will probably require a greater number of general loan sources,
It is essential for the broker to know the lender’s product offerings and basic underwriting criteria, as this will enable the broker to align the borrower’s
financial needs to the appropriate lender. When this happens, the loan closes
faster and the broker’s cash register will ring faster.
As time-consuming as it may be, a commercial mortgage broker must thoroughly understand a lender’s basic lending philosophy, such as their ideal
loan size, geographic preferences, volume abilities, interest rates and fees,
as well as their attitude toward working with brokers. Brokers must clearly
understand market expectations and structure their promotional strategies
accordingly. Once the broker addresses these issues, the next step is to list
and start contacting potential lenders.
Customer development may well be the most important of the four steps for
future-proofing your business. It does not matter how knowledgeable a broker
is, how many lender sources they have or how high-tech their operations are
if they have no customers. Nothing happens until a sale is made.
The internet makes it easy to compare lenders, loan programs and interest
rates. Frequently, a borrower bases their loan decision almost exclusively
on the interest rate without giving consideration to broker expertise and
Essentially, gaining new customers requires convincing potential borrowers to engage with the broker’s service. The objective is somewhat simple but
the process is more challenging and, at times, it is less cost-effective. To start,
a borrower must know of the broker and the services they offer. For this to
happen, a broker must create market awareness or name recognition.
There are a few simple and inexpensive strategies a broker can employ to
develop a customer base. Advertise in appropriate real estate publications.
Hand out business cards, flyers and brochures at every opportunity. Document and advertise your closed loans and projects — although you should
obtain the clients’ permission to include their names. Contact builders and
real estate agents, who can place signs about your financing services.
Offer continuing-education classes for real estate agents. They often need
these types of credits and the broker can benefit by building a database of
referral sources. Write articles for trade magazines and local business publications. Speak or teach when the right opportunities present themselves.
Publicize your specific expertise and unique skill sets. Be approachable and
responsive to earn trust.
Commercial mortgage brokers must think differently, apply themselves differently and appear differently in order to stand out. Continued success is predicated upon adaptation. The choice is simple: Be willing to change or be left
behind. The model that got you here will not take you where you wish to go. n
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.