What do you charge?
We typically charge a fee equal to 1% of the loan amount payable at closing. There is some flexibility on this figure on larger transactions.
Why should I use an intermediary?
In the current market, we will talk to 30 sources on the average transaction, which often results in only one or two term sheets. It is virtually impossible for a client who is not in the market looking for financing every single day to identify all of these sources or to manage such a process on their own. Further, we have longstanding relationships with the vast majority of the institutions we deal with which means we know who the individuals are who get deals done. Oftentimes, we may take a loan request to a source that a client could have gone to on their own, but if you are not speaking with the right person at an institution, it will make the difference as to whether or not your deal gets done. We know who the right individuals are. Lending is like fishing, 10% of the people do 90% of the business. We are a correspondent for many lenders that will not accept a loan submission directly from the borrower. Therefore it is often impossible to get a transaction exposed to the right audience by going it alone.
Why is it worth it to pay an intermediary?
A better question is how can you not afford to pay an intermediary? Getting a better rate pays for itself over and over again. For example, say you were to borrow $1,000,000 for 5 years with a 25 year amortization at 6.5%. If you had paid an intermediary and the transaction cost you an extra ½% in fee (assume 1.5% vs. 1%) to get a rate of 6% (vs. 6.5%), it would result in approximately $18,500 less in debt service over 5 years. Less the extra ½% that it cost to use an intermediary, this would result in savings of approximately $13,500. This savings does not take into account the value of your time spent trying to talk to 30 banks at the same time to get the best rate. Despite the obvious advantage stated above, getting the best rate is not the main advantage of using an intermediary. In this kind of lending climate, certainty of execution trumps all else. Certainty of execution is the product we sell. This is what we hang our reputation on, where the rubber meets the road. When you desperately need a loan to execute on your business plan, it is easy to be dazzled by someone who says they will deliver the sun, the moon and the stars. Sometimes it is not about getting the best deal offered but rather it is about knowing that your deal will close on time as advertised.
What is the specific service that we provide?
If we chose to take on your financing assignment, we will gather all of the necessary information to compile your loan request including relevant market information and put it into a clear and concise loan request package that it written in the product compared to other mortgage bankers and our often told by our lenders that our work product is superior. This is critical as it means that the transactions that we put out in the market will receive the upmost attention from our sources and our sources know that we are making their job a lot easier so they work on our transactions first. Oftentimes, our loan request effectively becomes the credit memo that our lenders take into loan committee.