At its highest level, commercial mortgage brokerage is a collaborative process of discovery. On the borrower side, the more the broker is able to learn about the property and the borrower’s needs, the more effectively he can focus his thinking and utilize his experience to assist the borrower in structuring the deal. On the lender side, a good broker carefully cultivates an effective and aggressive group of lenders. These are the kind of worthwhile relationships that can only develop over time. With each and every deal the relationship is tested and seasoned with mutual respect. The bar is raised. The boundaries are stretched. The stakes are always high because of the faith that has been placed in the broker by the client. Therefore, if disappointed by a lender’s execution, or by changes that (hopefully won’t) occur from the time a lender quotes a deal to the time the lender issues a commitment letter, that lender may never have another chance to win over that broker.

Part of the value, therefore, of a seasoned mortgage broker, is accumulating and honing these performance-based lender relationships to a fine edge so they can be brought to bear on an individual borrower’s transaction.

At a sophisticated level, commercial real estate financing requires finesse, experience and the aforementioned carefully cultivated, time-tested array of “arrows” in the broker’s “quiver”. Or, to state it more generically: to be effective, one needs the right tool at the right time to accomplish a particular job.

What are the implications of all this for the borrower? In return for a mortgage brokerage fee, all these time-tested lender relationships and the broker’s insight, judgment and advisory skills are leveraged by the borrower for a finite period of time without the need to employ such expertise on a permanent basis. All in all, I’d say it’s an amazingly efficient arrangement.

So, who should you turn to when it’s time to reach out to a broker? Which company should you choose? As in any endeavor, there’s a pyramid of quality and expertise: plenty of mediocrity at the bottom, some decent performers in the middle and a small number of virtuosos at the top. As in choosing a doctor, a lawyer, a contractor or a vacation, nothing beats a word-of-mouth recommendation from someone you know and trust. Next there’s old-fashioned due-diligence which would include doing a web search and reviewing newspaper articles (for example its easy to search the archives of the NY Times), calling accountants and lawyers active in real estate for recommendations, and asking for references from the broker’s past clients. Ultimately, it will come down to a face-to-face meeting, the answers to your questions, and your gut feeling about the broker, his ethics and his company. The depth of the organization is quite important because a great broker must have top-notch administrative, analytical and processing support to be your optimal choice.

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