We have talked in depth about why large commercial loans are so difficult to close. First of all, large loans have to almost perfect because so many executives have to sign off on the deal.
In addition, most of the large commercial loans we see as mortgage brokers have already been turned down by several banks. The loan may have been turned down because borrower’s credit was flawed, the borrower lacked enough equity in the property or a large enough cash down payment, the developer was not contributing enough equity into the construction deal, or the borrower’s net worth was too small when compared to the loan amount. Remember, if a commercial real estate investor is really clean and really strong, he usually has a half-dozen different bankers in his back pocket.
Lastly, even if a mortgage broker is lucky enough to have a perfect large commercial loan in hand, he will often still fail to place the loan because he is not in the Big Boy clique. Remember, the bank loan officers who close the really large commercial loans are very choosy about the brokers with whom they will work. They’ll politely take your call, but the moment they discover a black hair – and every deal has a black hair – they will often just shoot you out of the water.
All these things being said, however, a few large commercial loans do sometimes close. What allows these large loans to close? Here’s my observation:
Large commercial loans only close when the
mortgage broker doesn’t need the commission.
If the mortgage broker has plenty of dough in the bank, and if he has a huge pipeline of small and/or high-probability commercial loans in processing, the mortgage broker will sound cool, relaxed, funny, and knowledgeable when he presents his large loan to his lender.
But if the mortgage broker needs the large loan to close, the battle is already lost. The mortgage broker will sound nervous and needy on the phone, so the bank loan officer will already be assuming his “No!” position.
The wise mortgage broker will therefore focus his time on building a huge pipeline of smaller and/or high-probability commercial loans before spending a lot of time trying to close a single large loan. I’m not saying that you shouldn’t work on a large commercial loan if it falls in your lap. I’m just saying that you shouldn’t neglect the smaller commercial deals in your pipeline because they are probably the only deals that will close.
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