Mitch Ginsberg is co-founder and CEO of CommLoan, a
commercial real estate lending marketplace that combines
state-of-the-art technology with a concierge service to give
borrowers unprecedented access to the capital markets. Reach
Ginsberg at (877) 566-8734 or firstname.lastname@example.org.
A Blockbuster Moment Has Arrived
It’s time for originators to adapt and change,
or face the prospect of future irrelevance
By Mitch Ginsberg
Across nearly every industry, the relation- ship between consumers, suppliers and intermediaries has changed so much over the last decade it’s nearly unrecognizable
today. Consider the entertainment industry: Ten years
ago, if you wanted to watch a movie, you’d go to your
neighborhood Blockbuster retail store and hope they
had a copy of the title you wanted in stock.
For suppliers, only the biggest blockbuster movies
made it to the shelves. The intermediaries — the Blockbuster stores — had all the power. But as technology
advanced to enable a different (and better) way for
consumers to get movies via online streaming and
other methods, the intermediaries that didn’t likewise
advance went the way of, well, the dinosaurs.
You could say, as the Silicon Valley venture capitalist
Marc Andreessen famously did, that software has eaten
the world. It’s not only the entertainment industry, of
course. Most industries have been disrupted by technology — including the mortgage industry.
Residential mortgage lending has been significantly
upended by technology companies such as Quicken
Loans, Lending Tree and SoFi, among others. This
upheaval has made the world better for homebuyers
and lenders, and also for the mortgage brokers who
figured out how to evolve and provide a new service
that homebuyers demand under this new paradigm.
Yet, the commercial real estate lending process continues
to be slow and inefficient, without fully exploiting
the benefits of technology that have been brought to
The entertainment industry is nearly unrecognizable
today. There is the complete opening of access. Today,
consumers can watch virtually any movie, anytime,
anywhere. And suppliers with even extremely niche
offerings have access to the market, because the cost
of distribution has fallen so dramatically. The intermediaries — think Netflix, Amazon and Hulu — still have
much of the power, but because the industry has been
so upended, they are much more responsive to consumer
demand than ever before.
The driving force of the disruption in the entertainment
industry has been the consumer, but it is technology
that has enabled it. When compression technology
advanced significantly so that movies could be
streamed in relatively high definition without buffering,
that enabled a user experience as good as (or even better
than) a DVD or cable TV. When algorithms advanced
to the point of making useful movie- or show-watch-
ing recommendations (“You might also like this”),
number of shelves and titles.
As with the entertainment industry — and any other
that has been disrupted by technology — a revolution is
envisioned for the commercial mortgage business that
is driven by a desire to redefine the experience for the
buyer. Just as Netflix redefined the experience for entertainment consumers, Amazon did for retail consumers
and Expedia did for travel consumers, technology is
likely to redefine the experience for commercial real
One of the worst aspects of the current commercial
real estate lending process is the difficulty borrowers
have in identifying the best lender, given their property
type and other circumstances. Even for borrowers
leveraging brokers — and brokers themselves — the
fragmented nature of the industry makes matching
borrowers and lenders an extremely time-consuming
and inefficient process.
One solution for the commercial mortgage industry
could be an online platform that features a search
engine like those that power Expedia, Netflix or Amazon — which makes it easy for guests, viewers and
buyers to find hotels, movies and retail products. An
online commercial mortgage platform of this magnitude would allow buyers and brokers to key in their
particular variables and get a list of lenders and
loans that best fit their descriptions. It would make
a previously slow and burdensome process very quick
and efficient. It also opens up a whole world of options
that no single borrower or broker could possibly know
One of the key elements of such technology platforms, which are starting to emerge in the commercial
mortgage arena, is that they put the buyer, or borrower,
in control. The best of these platforms are not simply
clearinghouse-type sites that still require borrowers
to navigate the process on their own, coordinating
between multiple lenders and never knowing if the
options they’re looking at are the best ones available.
A commercial mortgage is too technical a product to
let borrowers loose on a search engine and assume
they’ll get great results.
The best online platforms have a system in place
that promotes matching each borrower with a seasoned
loan consultant who can ask the right questions, get the
variables, input them into the online platform, then
find the best lender and loan options. So, mortgage
brokers still play a vital role in this new online world.
And, just like Netflix, Amazon or Expedia, the success
of the platform will depend on its ability to accurately
match the borrower with the best loan program.
Thinking about the disruption that technology is now
causing in the commercial real estate lending industry.
Projecting five years into the future, it’s almost certain
that some commercial mortgage brokers will be put
out of business. Other brokers, however, will be even
better off than they are today, because they will have
embraced technology and the efficiencies it can bring
to their profession.
Today, even though about two-thirds of all commercial real estate loans are originated by third parties,
in most cases these loans are not prescreened to the
respective lender’s guidelines. Lenders have to invest
a significant amount of time into reviewing each loan,
even though they end up closing only about 10 percent
of the loans they review. With an online platform as
outlined, lenders can receive a fully processed loan
package that is pre-underwritten to their guidelines,
requiring a fraction of the review time they would
typically have to invest.
Mortgage originators now face a choice between a
“Blockbuster” and a “Best Buy” moment. Blockbuster
didn’t adapt to a world with Netflix in it. Best Buy, by
contrast, has adapted to a world with Amazon in it.
They did so by focusing on the consumer experience.
Best Buy survived by embracing the aspects that Amazon
introduced (the ability to check prices from multiple
sellers in real time, for example) and honed services
that Amazon didn’t offer. Today, Best Buy’s stock price is
well above what it was five years ago — quite an anomaly
compared to many other brick-and-mortar retailers.
n n n
Like Best Buy, commercial mortgage brokers will be
more competitive and successful if they embrace
technology platforms that make it easier and faster to
match borrowers and lenders — while also honing their
ability to help borrowers navigate those platforms. n