All Forum Posts by: Bryan Mitchell

@Bryan Mitchell, I have no doubt that many investors, especially right now, share your same sentiment. 

I will say, having a banking relationship can serve a purpose, at least at first, until you find the right broker you trust. There are many benefits to using a broker vs going direct, but just from a rate and term perspective, still maintaining your banking relationship allows you to tangibly see whether the broker can save you money and get you better terms.

For example, unless you’re talking about a complex ground-up construction deal, with many moving parts, that will take significant time and manpower to execute, a good broker, confident in their abilities, will usually work with their clients and allow them to work with their existing relationships while the broker pursues and reaches out to their own lenders. This allows the client to compare the term sheets they get from their banks, with the term sheets the broker gets them from their lenders. If after calculating the broker’s fee, you’re still coming out ahead with what the broker is offering, it’s a no-brainer to go with that.

Do that a couple times, and soon you’ll see you found yourself a good one. Not to mention all the underwriting, negotiating, due diligence, proofreading and paperwork they handle for you. Eventually, most sophisticated investors don’t bother with their own banking relationships, and just have their broker approach them as well. They realize it’s not worth their time, and usually, the broker, who probably already does tens of millions of dollars plus in financing annually with their banks, can probably get a better rate, than any one investor going direct.

What your experiencing is something that happens every time the market starts to go bad, and happened previously during the 2008 crash. Banks start tightening their belt, and bankers are faced with two options: keeping their job, or trying to push a risky deal through. And that relationship you thought you had, turns out not to matter all that much.

This ultimately is one of the differences between developing a relationship with a bank, vs developing a relationship with a mortgage broker.

Banks are like car dealerships. Having a great relationship with your guy at Lexus, will only get you access to Lexus cars. As good of a relationship you have with him, he will never sell you a Mercedes, nor will he ever suggest one to you. Each bank has their unique appetite and products they offer. Limiting yourself to a few banking relationships only give you access to what those few banks can offer.

A mortgage broker, on the other hand, is the equivalent to someone who has access to every car on the planet. They’re not restricted by any specific bank’s new appetite for deals or products they offer, and can utilize their hundreds of lending relationships to find the lender who will do the deal.

In every market, but especially in this one, a good commercial mortgage broker is worth their weight in gold.