This post is written to appeal to all of the super-brokerages out there (DLC, Verico, Invis, MA, Centum, etc..) to encourage their residential brokers to become competent enough to help people with financing commercial deals. At least small ones under $1M. Why am I putting my butt on the line and why should I even care?
As Simon Sinek said it best, “It all starts with why.” I could never figure this out but the statistics from our brethren in Australia, EU, and USA don’t lie. They have the majority of the market share for loan originations as mortgage brokers instead of the bank. They handle pretty much every part of financing out there. In Canada, it’s the total opposite. Why is that? I believe and feel strongly that it boils down to one thing competency.
When I first started out as a broker, we were told to market ourselves to be the one stop shop when it comes to financing. The ugly truth is that over 80% of mortgage brokers out there are not qualified to utter those words. I’ll wager to even say 90%! I am all about being genuine and complete integrity. How can I say that when clients come to me about financing a commercial/investment property and I turn them away or tell them to deal directly with the bank? Who is representing the client’s best interest now? Can you say that the employee of the bank represents the client’s best interest more or his/her employer (the bank)? You just sent your client directly to the bank like a sheep to be slaughtered!!! There goes the integrity. Let’s face it, this is a sad reality and we need to FIX it!
Why not make it a pre-requisite to have every broker learn how to understand commercial financing? I understand that all the brokerage owners (including commercial mortgage brokers) out there are protective about their space in this arena. I get it. But hear me out. Do you really want to deal with those sub $1M deals that are boring to do, require nearly as much time and energy to process or would you prefer the larger and more lucrative deals? I am not trying to be facetious. What I am getting at is this: why not have all the residential brokers increase their competency to at least be able to handle the smaller deals and refer all the big ones to the commercial division?
I know that the commercial broker at the head office (DLC Commercial, MAC Commercial, Verico Commercial etc..) want all the accolades and most of the money. I get it. Hear me out though. What if we get our entire broker sales force to become competent enough that the public will recognize us as the go-to source for the best financing deals. I envision that this will create more referrals and direct contacts to the broker channel instead of giving away business. Would this not also increase the amount of large deals being placed with the head office commercial division? Of course the main super brokerages don’t have the time to train the entire hoard of residential brokers in all the complexity of commercial financing. There’s just not enough time to invest into such an undertaking.
I understand. Let’s consider for a second though. What happens when we train all our residential mortgage brokers to be competent enough to handle the smaller commercial deals? The residential mortgage brokers will:
be able to tap another steam of income and make more money
become more confident at being able to handle all aspects of financing
receive more referrals/leads from existing client (go-to person status!)
earn the right to say they are the one stop shop in financing!
What happens when a big deal comes across their desk? Most likely it will be complicated and beyond their scope. They will quickly recognize that and forward it to their respective head office for assistance. Competent brokers will do that since they know things can go wrong quickly in commercial deals. Better to make 25% than ZERO. As brokers at commercial head office, this is the ideal situation that you want. Who’s got the time to fiddle around with $200-500K warehouse deals that will only earn a fraction of those $10M+ deals? The hungry residential brokers would of course. You r residential brokers get what they want and head office gets what it really wants. It’s a win-win-win for everyone.
Let’s consider this , the retail banks still have the biggest share of the commercial space. Why NOT have all the independent mortgage brokers out there become competent enough to do commercial financing so that WE as brokers CAN and WILL DOMINATE the financing space like our Australian, European and American counterparts have done! I don’t believe or feel that this is a lofty goal. If I can learn how to become competent in commercial financing in under 2 years, why not give others the same opportunity to do so?
I am very passionate about this topic because I have made huge differences in my client’s lives. Recently, I negotiated a commercial renewal for one of my client and I saved them nearly $25,000 over 5 years!!! If they didn’t have me representing their interest, would they have received that? I highly doubt it. That would have been a $25,000 profit added to the bank’s bottom line. When you can do that, the client will be more than happy to pay you a piece of that. It’s really not all about the money. Look at what I did for them! I put that $25,000 into their family’s pocket instead of bank profit.
I have done many, many commercial deals over the years and save my clients hundreds of thousands of dollars. It’s really not that hard. It’s all about numbers and common sense lending. I have always wondered, “why isn’t every broker doing this?”. I figure it boils down to two things: lack of knowledge and lack of confidence. The first one I can teach quickly, the second part will take time to coach and mentor. However, all it takes is in the field training and the first few success will quickly build confidence. I guarantee you!
If after reading this and you still disagree with me, great send me the referral. Just understand this: You cannot and should NOT call yourself a mortgage broker if all you are doing is taking an application for a residential mortgage. Anyone can do that! You can see how many recent school graduates are being employed as mortgage advisors for the banks. We as mortgage brokers owe it to the public to earn our pay and move our game up another level. Invest in yourself and get paid what your time is worth.
Fine, if your brokerage does not have the capacity or the staff to train you in commercial financing then find yourself a mentor or consider coming to my next commercial financing mastery workshop. If you have a group and would like me to put a class on and train everyone, email me and let’s have a conversation. The introduction workshop is 3+ hours long. Email me for details.
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