<< Value continued from Page 32
“Although it is unreasonable to believe that every
project should work for every lender, more deals
can be closed than not by integrating creativity
and flexibility into the review process.”
Base a pro forma loan agreement on
today’s values, not an artificial projection
of what may or may not occur.
Respect the process
Mortgage brokers should expect lenders
to conduct a thorough review of the
project and seek to fully understand all
of the development’s metrics. Some
lenders may conclude that rejecting a
deal is safer than approving a loan.
Before denying a proposal, however,
lenders also should first try to under-
stand what the borrower is attempting
to achieve. Each borrower is specific
and, therefore, comes with a unique set
of demands, procedures and goals.
Although it may seem like a borrower
is attempting to force the impossible,
lenders often can clear up misunderstandings by executing due diligence
— which includes thoroughly reviewing the project drawings and budget
— and by performing a proper site
visit. They should not simply dismiss a
project based on location, leverage or
even the borrower’s history.
Brokers should work with lenders
that give each project a fair chance
and — most certainly — the time it deserves. They should not dash that work
and commitment without first giving it
proper time and respect.
Mortgage brokers and borrowers
spend a great amount of time creating developments that are ready to
quickly and efficiently break ground.
Some developers spend years ensuring
that a project can be executed profitably.
Although it is unreasonable to believe
that every project should work for
every lender, more deals can be closed
than not by integrating creativity and
flexibility into the review process.
n n n
In short, there is not much that can be
done to stop the escalating costs of
construction. Market forces have been
set in motion, with commercial-property
developers and mortgage brokers the
unfortunate subjects of the whims of
By creating a closer and more efficient
partnership between brokers, borrowers
and lenders, however, more construction
deals can be executed than ever before.
By working to make comprehensive
sense of each deal, the rate of closings
can increase at a rate proportionate to
the rising costs of construction. n