Sometimes a new client will ask what issues tend to come up again and again during the commercial mortgage financing process and what mistakes they should try to avoid. Here are the top seven mistakes that come to mind. As you’ll see, most of these fall under the general topic of “timing is everything”:

1- Searching too hard for the “bottom” when choosing the moment to lock an interest rate-

Focus on the monthly/annual payment being within your target range. DO NOT focus on hitting the absolute bottom. You’re more likely to hit the bottom if you’re not obsessing over it.

2- Working with multiple brokers –

The myth is that taking this approach benefits the borrower because it generates more market coverage and insures a better result. In the borrower’s mind the math goes something like this: “more brokers means more offers which should result in a better deal for me”.

The fact is that when lenders start seeing the same loan submission coming in from multiple sources they assume that no one is actually in control of the deal. Lenders are less likely to put their best efforts forward in such a fuzzy environment.

The borrower’s best strategy is to do some meaningful due diligence, check references and select a knowledgeable, well-staffed and reputable broker. Exclusively engage that broker for a finite period of time, and allow that broker to work the entire marketplace to obtain the best pricing and structure.

3- Failing to recognize and effectively negotiate significant deal points in the lender’s offer letter right at the beginning.

4- Assuming (especially in NY state) that the mortgage can be assigned, but waiting too long to see whether: a) the old lender will cooperate, b) all the necessary original documents are available, and that c) your attorney prepares a draft assignment in a timely manner.

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