Thoughts from a Commercial Mortgage Broker: Eight Ways to Help Close Your Deal

Doug Marshall, CCIM
Market Assessment


In today’s commercial real estate environment it is imperative that we do everything we can to get the few deals that are out there closed.

We certainly don’t want to be the cause for a sales transaction going sideways and yet many times we can inadvertently put a deal at risk.

Shown below are eight ways a real estate broker can help his chances of his deal closing.

1. Listing brokers, use realistic pro forma numbers in your marketing packages. Good, solid numbers that can be supported by the historical operating statements makes everyone’s job (buyer’s broker, appraiser, mortgage broker and lender) that much easier.
   
   
2. Listing brokers, accept the responsibility of getting property documentation from the seller into a format that is acceptable to the buyer. Without good property documentation the decision to buy is put at risk.
   
   The goal should be to make it as easy as possible for the buyer to agree to buy the property.
   
   Once the deal is accepted by the buyer, the property documentation used to get the buyer to say “yes” then helps the appraiser and the lender do their jobs.
   
   
3. Buyer’s broker, get involved in assisting the client with choosing the mortgage broker/lender. As a broker, you are perceived as knowledgeable when you can recommend a competent mortgage broker to assist your client. It also increases your probability of getting paid.
   
   
4. Buyer’s broker, communicate regularly with the other real estate professionals (mortgage broker, lender, escrow officer, appraiser, etc.) that are working to close the transaction. We are all on the same team. The buyer’s broker should consider himself the “quarterback” leading his team to the finish line.
   
   
5. Use realistic deadlines in the sales agreement. A good mortgage broker can assist you in determining reasonable timelines for when the loan will be approved and when it will close.
   
   
6. Be proactive about the issues, not reactive. A good real estate broker anticipates what the issues are going to be and then presents his rationale with sound documentation that mitigates these issues.
   
   
7. Buyer’s broker, encourage the borrower to get his personal loan documentation into the lender quickly, thoroughly and accurately. Again, the goal should be to make the loan process as easy as possible so that the lender can get it approved.
   
   
8. Don’t violate the “Golden Rule” of lending which is, “He who has the gold makes the rules.” Accept that the lender has a process they must follow. Your job is to help the mortgage broker/lender get the loan approved so we can all get paid.

A special thanks to Jerry Aalfs, Tom Bradley, Tom Fischer and Liz Tilbury who gave valuable input on this article.

Potiowsky’s View of the Oregon Economy

Doug Marshall, CCIM
Market Assessment

Tom Potiowsky, the State of Oregon Economist, recently presented his most current status of the Oregon economy to the Oregon SW Washington CCIM chapter.

His presentation, titled “Oregon Economy: Up the Long, Long, Long Road to Recovery”, aptly summarized his findings.

The good news: the economy, which bottomed out last fall, is now growing again, although ever so slowly. Shown below are the top 10 facts I gleaned from Mr. Potiowsky’s presentation:

1. As of April 2010 the state’s unemployment rate is 10.6% compared to 9.9% nationally.

2. Job growth (-1.7%) ranks 41^st for all states for April 2010 over April 2009.

3. Total nonfarm employment dropped -3.0% year-over-year for the 1^st quarter of 2010.

4. The rate of decline in job losses has slowed from 10,000 a month for the first six months of 2009 to 875 per month for the first four months of 2010. Job losses are anticipated to continue through this quarter with only mild job growth the rest of the year.

5. Oregon exports increased 41% in the 1^st quarter of 2010 compared to the same period last year but declined 23% when compared to 2008.

6. Personal income growth has almost stabilized at -0.1% for 4^th quarter of 2009 over 4^th quarter of 2008.

7. When compared to other states our unemployment rate is significantly better than Nevada and Arizona, about the same as Idaho and California and significantly worse than Utah and Washington.

8. From Oregon’s peak employment (which occurred in March 2008) it is estimated that it will take around 76 months (about 6+ years) to get state employment back to the same level. Only the 1980-82 recession took longer to recover from, that taking about 7 years.

9. U.S. employment is projected to take about 60 months to recover to the level it was prior to the recession. This is predicted to be the longest recovery period of the 10 recessions (by a wide margin) that has occurred since WWII.

10. Oregon’s Index of Leading Indicators is in positive territory for the first time since late 2007. The six-month annualized percent change is 3.3%. Nine of the
11 leading economic indicators are positive.

So where we go from here depends on many factors. For example, on the upside other parts of the world could recover more quickly increasing the demand for our exports.

On the downside, the potential for a real estate bubble in China or the affect of the Greek crisis on the Euro could adversely impact us and the rest of the world. Who knows?

We can focus on the unknowns or those things out of our control or we can roll up our sleeves and focus on those things we can change. This reminds me of an old African proverb:

Every morning in Africa, a gazelle wakes up.
It knows it must run faster than the fastest lion or it will be killed.
Every morning a lion wakes up.
It knows it must outrun the slowest gazelle or it will starve to death.
It doesn’t matter whether you are a lion or a gazelle.
When the sun comes up, you better start running.

Let’s all run in these difficult times as best we can to see another day!