Why A CMB Consultant- Commercial Mortgage Broker
Many Real Estate Investors wonder why they should hire a commercial mortgage broker and whether the fee is worth the service. That is a fair question to ask. As a matter of fact it is a prudent question to ask each time you seek financing. The answer can vary with each time you seek financing. Before you determine if you need the assistance of a broker you must first know what a CMB does.
What Does A CMB Do
- Preliminary Transaction Analysis
- Package Preparation and Presentation
- Lender and Program Selection
- Letter of Interest Analysis
- Review Third Party Verifications
- Review Final Approval
- Review Closing Documents
Preliminary Transaction Analysis
A good Commercial Mortgage Broker Consultant has experience and relationships to know which rel estate projects they can get financing for. Many have programs that are not available through local banks. As a prudent measure you should first discuss your project with your bank and another local bank or two to determine if they can provide the financing and terms you need. If they can not, submit your project to an experienced and reputable CMB for preliminary analysis. This should be a free service. If a consultant charges you to review your project, then avoid them.
Package Preparation and Presentation
In over 20 years of experience I have seen very few people present a good package that explains their financing project and funding objectives in terms that is acceptable to Commercial Lenders. This lack of proper package preparation and presentation kills many deals that deserve funding. This even happens when the real estate investor has had substantial experience. For this reason alone the CMB can be worth there weight in gold.
Lender and Program Selection
The CMB is a money broker. They have access to many more programs than any one lender. As such they are instrumental in choosing the right program and lender for your project. This is not so with local banks. They are limited to their funds and correspondent relationships. Most local banks focus is based on building deposit relationships not having the most solutions to fund their customers real estate deals. The CMB also does due diligence to weed out the many scams. This way they save you time and money.
Letter of Interest Analysis
This is really a part of choosing a lender and program because the Letter of Interest is the terms that the lender is willing to do the deal. More importantly, your consultant will review and explain those terms to you and help you ensure you are getting the right financing.
Third party verifications, final approval and closing documents are all important to you. Your consultant will ensure the final deal meets your standards and if something changes they will know why. There are often changes in the terms if there are changes in the information verified. For instance, if the appraisal came in low or it shows substantial deferred maintenance, that could be a reason the deal may change. Your CMB will stay on top of these things and offer solutions in your best interest and help the deal close.
You should always have legal representation at the closing. Yet your consultant should either be at the closing or be available to ensure the deal closes smoothly. This is the ultimate reason why you should have a CMB Consultant; to ensure your deal closes.
All in all the Commercial Mortgage Broker is a consultant working on your behalf to make sure you get your project funded with the best terms available. A good consultant has resources a local bank does not. This can save you both time and money while helping your project fund when it might not have without your hiring them.