Commercial Loans and Fun Blog

Residential Realtors Are a Great Source for Commercial Loans

Posted by George Blackburne on Tue, Apr 10, 2012

The reason why residential real estate brokers are a great source for commercial loans is because they are NOT experts at commercial real estate finance.  They often need the help of a commercial mortgage broker to find a lender for their buyers.

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In contrast, commercial real estate brokers ("commercial brokers") are often near-experts at commercial mortgage finance.  Because all of the properties they sell are commercial in nature, they have their own personal stables of bankers and other direct commercial lenders that they use to finance their commercial property sales.

In addition, since they often sit in the same office together, its easy for them to just turn around and ask, "Hey, Steve, what bank do we know that is financing hotels today?"  Therefore these guys often don't need the help of a commercial mortgage broker.  They know this stuff as well as you and me.

There is another reason why I absolutely love residential real estate brokers as a source of commercial loans.  Residential real estate brokers are the guys who list the small commercial properties, like houses converted into small office buildings, small motels, and bread-and-butter mixed use properties, like a small retail shop on a busy strip with a triplex in the back.

And the thing about small commercial loans is that they close!  If your current pipeline is full $5 million and $10 million loans, especially if they are construction loans or international loans, there is a very good chance that every one of your deals will fall out.  Remember, it is the small commercial loans that actually close.

So why won't the big commercial brokers - companies like CB Richard Ellis, Cushman Wakefield, and Marcus & Millichap - list small commercial properties for sale?  They usually don't want to be bothered with properties valued at less than $2 million. 

This means that the owners of small commercial properties are often forced to list their properties for sale will small, mom-and-pop, residential brokerages.  That's wonderful news for us commercial mortgage brokers because the agents in these mom-and-pop shops actually need us. 

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Topics: residential realtors