It’s no secret – the commercial mortgage transaction process is complex and basically the bane of existence for every commercial broker in the industry. But despite having a bad reputation (too long and too complicated at times), the transaction process is actually quite simple. Or at least it can be.
From submission to closing, you can generally sum up the process in five stages— loan submission, lender’s acceptance, conditions, underwriting, and closing. Depending on which type of lender you partner with for your deals, you and your clients will be required to submit specific paperwork to move forward through each of these stages and get your loan to the finish line.
The trick to mastering a transaction and experiencing that “smooth process” some brokers talk about is understanding a few key points that involve guidelines, timelines, and of course, communication. Follow these three easy steps to help you have a better closing experience on your next commercial loan.
Set Expectations for Your Borrower
The first thing brokers should do is get acquainted with each of the lenders they work with on their deals. Every lender is different, so it’s crucial to keep yourself informed about their different guidelines to see if they fit your clients’ current needs.
It’s also important to communicate these timelines with your borrower. In some cases, transaction length will be the deciding factor for a client choosing between a bridge loan and permanent financing.
But even if your borrower doesn’t have a pressing need for financing, it’s still a smart idea to explain the transaction process and set expectations for each step. Over-communicating early on could save you significant headaches as you approach closing.
For example, borrowers who are not familiar with commercial lending may not fully understand how long the property appraisal process takes or how much it costs. You can eliminate the element of surprise by sharing some of your experience with these clients.
As you likely know, every commercial loan presents unique challenges – no two fundings are alike. Helping your borrower feel confident and comfortable regardless of this reality will create a much smoother transaction process for all parties.
Submit a Complete Package
One of the easiest ways to experience a smoother (and quicker!) transaction is by providing a complete package of the required documentation at the beginning of the process. It’s important that brokers don’t gloss over this step because submitting incomplete documents will often cause delays in the process.
So how do you know exactly which forms to fill out for your borrower? Start by simply visiting your lender’s website. They often have a resource page detailing the list of documents they require for transactions. Another option is asking your lender for a checklist of items your borrower will need to submit.
Silver Hill Pro-tip: We try to make it as easy as possible for you when it comes to doc submission. You can see what we require for each program here. When it comes time to submit these docs, remember that you can use DocuSign to accelerate the process.
Communicate With All Parties
Communication is key when closing a commercial loan. As the bridge between borrowers and lenders, brokers are responsible for making sure everyone is on the same page at every step of the transaction process.
Hopefully, you can develop a strong relationship with a particular lender’s Transaction Manager or Processor. Understanding how this person works and, more importantly, how they communicate, can make all the difference during a commercial transaction.
We have brokers who keep choosing Silver Hill purely because of the relationship they have with their Processor. The consistency and reliability are key, especially for those busy originators who close a large number of loans each month.
How you choose to communicate with your borrower is ultimately up to you. In fact, you may choose to let your borrower communicate directly with the lender. No matter which approach you take, the end result should be a confident and satisfied borrower.
Silver Hill Pro-tip: Set milestones for yourself throughout the transaction process. These will be your main communication touchpoints with both the lender and your borrower.
Think of the moments where delays often occur and schedule calls to overcome them. Whether it’s a kickoff discussion between all parties or a check-in once the lender receives all necessary 3rd party reports, these communication touchpoints can reduce delays and limit borrower confusion.
The commercial transaction process is complex, but it doesn’t have to be impossible. With these simple steps, you can be on your way to experiencing a smooth closing.
Interested in experiencing our commercial mortgage transaction process? Connect with your Silver Hill Account Executive today to get started on your deals.