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58 Scotsman Guide Commercial Edition | ScotsmanGuide.com | August 2018
<< Niches continued from Page 57
There are several reasons specialists typically earn more than generalists. Mortgage brokers who are special- ists do the same kinds of deals over
and over — which means they bring a volume of deals to
a handful of chosen lenders. Therefore, they often get VIP
treatment and volume-discount pricing from these lenders.
In addition, specialists tend to close more loans with
fewer man hours. Their familiarity with loan guidelines
and processes, as well as any potential pitfalls and how
to circumnavigate them, enables these brokers to be
more efficient. Because they know their lending niche
well, they can quickly qualify transactions and avoid
working on deals that are not destined to be funded.
In short, specialists have tremendous advantages over
their generalist counterparts who do a wide variety of
Avoid the runaround
Imagine a borrower who has gotten the runaround
while trying to finance a hotel. What the borrower
might not realize — until it’s too late — is that many
lenders sound alike upfront during an initial phone
call or meeting: “Oh yes, Mr. Jones, our bank can cer-
tainly entertain your loan request, and we are an SBA
PLP (U.S. Small Business Administration preferred
The loan officer saying this, however, often only
knows that SBA finances hotels, but neither he nor his
underwriting department have ever done a hotel loan.
They don’t know what they don’t know. Through years
of experience, a mortgage broker will learn that if you
apply for a hotel loan at 100 randomly chosen banks,
three will be willing to fund it, if you’re lucky.
Yet there are other lenders that finance dozens of
these deals each year and it’s a routine matter for them.
Without going into the details of the reasons why, suffice
Create more value
to say that many brokers and borrowers waste countless
hours hunting for that needle-in-a-haystack lender that
will fund their loan while the clock is ticking on a transac-
tion under contract. On the other hand, when a borrower
goes to a true specialist in hotel financing, these brokers
and lenders can literally determine in minutes the
borrower’s actual chances of approval, all the pertinent
issues and how to navigate through them.
The above example is not only true of the hotel-financing niche, it is true of dozens of other niches
within the commercial real estate finance industry. This
brings us back to the value of specialization and some
key points to remember.
Specializing serves clients better. Rather than
having their deal tied up for weeks or months, only to
discover that it’s not going to work with that particular
lender — or that it won’t work as originally quoted or
structured — borrowers working with a broker specialist
get answers within minutes or hours. And, if there’s
an alternative way to do the deal, the specialist will
discover it quickly and begin to immediately move
down the right road. Countless deals die because
brokers and borrowers don’t realize the financing
isn’t going to be approved until weeks or months later,
often well beyond the deadlines of the purchase contract
or other contractual details.
Specializing serves the broker better. Mortgage
brokers who are specialists waste less time on deals
that won’t work because they have the knowledge
and expertise to screen for the real deal points upfront. This makes their business much more efficient.
The biggest cost for most brokerage businesses is “lost
opportunity costs,” or the time and energy spent on
deals that don’t close. This also hurts a broker’s reputation and decreases their chances of receiving repeat
business. Real estate agents, developers, bankers and
other referral sources want predictable outcomes and
“Many brokers and borrowers
waste countless hours hunting for
that needle-in-a-haystack lender.”