I’ve been asking a lot of real estate owners why they hire a commercial mortgage broker. A few themes emerged from these conversations.
- A typical borrower is not in the market often enough to maintain relationships with all of the best commercial real estate lenders
- A mortgage broker has clout with lenders that an individual borrower just does not have
- Mortgage brokers have access to proprietary lenders that are impossible for a borrower to access directly
- A borrower does not have the time or staff to handle the process of engaging with lenders to procure and negotiate loan quotes
Sure, a mortgage broker does at least some of these things and they create a market driving down the rate and helping to obtain optimal terms. So why do I also hear so much frustration with mortgage brokers. A few more themes emerge:
- High Fees.
Yes, they might pay for themselves by driving down my rate, but does that mean they get to charge me an hourly rate that would make the highest billing attorneys blush?
- Lack of transparency.
Are they directing me to the best deal, to their favorite golfing buddy, or to the biggest kickback?
It is well known in the industry that lenders pay mortgage brokers substantial “servicing fees” that are essentially kickbacks. These can add anywhere from 0.25% -3.0% to the borrower’s total cost in the process. (Wait, I thought my mortgage broker was a fiduciary?)
At TermSt., we do things a little differently. Our low fees will save you $75,000 on a typical $10 million deal, we give every borrower the clout to negotiate a great deal with our lenders, our cloud-based system makes the entire process easy and our process is completely transparent. You will see quotes from all lenders and we will be paid only what is agreed to in writing. Now that is a fiduciary!
Why do things the way you’ve always done them when there is a better solution. Yes, a mortgage broker is a good investment, but TermSt. is a better investment.
Don’t get brokered, get TermSt..
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