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Residential Agents Can Hit Jackpot With Commercial Referrals

But synergy between the two sides is sorely lacking in the real estate industry, experts say.

Residential real estate professionals may be leaving money on the table by neglecting to send referrals to commercial practitioners. But agents on both sides of the business should partner with each other to expand their clientele and improve their bottom lines, a panel of brokers told attendees at the Coldwell Banker Gen Blue conference in Las Vegas.

Robert Pressley, president of Coldwell Banker Commercial MECA in Charlotte, N.C., demonstrated how lucrative these partnerships can be. He recalled working with a New York–based residential agent in August who had a client looking to place $100 million in cash in a 1031 exchange. “I was able to close on more than $70 million and sent the referring agent a $345,000 referral fee,” Pressley said. “That’s one way to make money.”

Synergy between the residential and commercial sides, though, goes largely untapped in the industry, which flummoxes Bob Fredrickson, CCIM, president of Coldwell Banker Commercial Danforth in Federal Way, Wash. Having worked on both sides of the business himself, Fredrickson said he’s always had commercial and residential teams working together. “We’ve seen the results,” he said. “In 2017, we had $86,000 in referral fees, and in 2018, we had $525,000 in referral fees on the residential side. That is powerful. We got [residential agents’] attention because they can add 10 to 20 percent a year to their incomes.”

Pressley cautioned residential agents against pursuing their clients’ commercial interests if they don’t have experience handling such transactions. It’s bad for the client and themselves if they do it wrong, and it’s better to hand it off to a commercial pro, he said. “It’s never the big-performing residential agents trying to do [a commercial] deal. It’s the newer agents that don’t have a lot going on, and the last thing they should be doing is a commercial transaction. I don’t want to hurt anybody’s feelings, but I have never sold a house in my life and never will. I will mess it up so fast.”

But his advice is conditional: In rural areas where commercial transactions are more infrequent, agents may be wise to learn both sides of the business so they don’t have to send a client to another market to find a commercial pro, Pressley said. But in larger cities with a wealth of both types of transactions, residential and commercial deals should be handled separately by knowledgeable agents.

Commercial pros, too, should understand when to seek the expertise of a residential agent, Pressley noted. Oftentimes, they must cooperate with one another in a leasing or multifamily transaction, and it’s wise not to assume either party misunderstands the other and can be taken advantage of. Residential pros can be helpful to commercial brokers because they’re good at developing client relationships and can offer advice on making deeper business connections, Pressley said.

Duff Rubin, president of Coldwell Banker Residential Brokerage Mid-Atlantic, said that many home buyers may also be entrepreneurs interested in leasing space nearby. “Everyone who has a home has a job,” Rubin said. “Every single person [residential agents] are speaking to and selling a home to is a buyer in a potential commercial lease. They need to pull the leads out of them.”

Pressley said that while commercial agents can get a lot of referrals from the residential side, it doesn’t necessarily work the same in reverse. He said that most times when he sends referrals to residential agents, it involves a commercial client who needs to find homes for relocating employees. But with so many more residential agents than commercial ones, there’s a lot of competition, he said.

 

March 25, 2019 | by Buck Wargo

State of the Commercial Retail Market with Keith Watters

Keith Watters has been in the commercial mortgage business for many years. As an experienced agent, he is a great asset to the Mortgage Alliance Commercial team. Over the years Keith has been faced with almost every challenge possible when helping clients obtain financing.  As a mortgage broker, he gets to see all the action from the center field – both from the lender side and the retail side of the business. So when the Canadian Mortgage Professionals interviewed him about the state of the commercial retail market, here is what he had to say:

Q: What’s the state of the commercial retail market right now?

A: There’s lots available. As long as the interest rates stay low, the market will still be going. That’s what’s driving this whole market now – the low cost of borrowing.

Q: How should a lender decide whether to make a deal on a retail property?

A: the lenders I work with usually lend just on real estate. But then they look at the applicant, the retail outlet, as the guarantor. They tend to be real estate lenders rather than business lenders. But in the same breath, they have to make sure that retail outlet has the background experience and the cash flow to service the debt. That’s why they go back, usually, to a three-year history to see how [the business] is performing. If it’s a retail outlet, most lenders will lend on 65% of the value, and they’ll lend on “How would that property rent if it were vacant?”

Q: With retail being a tough market even in good years, how are lenders’ attitudes toward that business right now?

A: Lenders aren’t backing away. Right now in this market, we have too much money chasing not enough deals, so lenders are, at least in the Canadian market, tending to be fairly aggressive – as long as there’s real estate value there and the applicant has good cash flow.

Q: What do you think is the biggest challenge facing the commercial market over the next year?

A: I think availability. There’s a lot of money chasing good commercial deals. As soon as a good commercial plaza comes on the market, it’s just like residential housing – there’s multiple offers.

 

Article Reference: http://www.mortgagebrokernews.ca/contents/e-magazine.aspx?id=191044

Related: http://macommercial.ca/2015/03/10/oldest-rookie-joins-macc/

Lenders Have Become Less Conservative

Interest rates are yet again at an all-time low, with credit unions like Meridian offering residential mortgage rates of as low as 1.49 per cent. Rates are even more attractive on the commercial side of mortgages. We can officially say the spring market is underway.

In a recent interview with the Canadian Mortgage Professionals (CMP), Mike Lee, head of Mortgage Alliance Commercial in B.C., stated that “interest rates are really pretty spectacular.”

“One of the asset classes that has become really spectacular is multi-family apartment buildings because, as an example, I just got quoted from a lender for an apartment building loan, CMHC insured, over $1 million, they’re quoting 1.75 per cent for a five-year [rate at press time]. It fluctuates daily, though,” Lee says. “A five-year term at 1.75 per cent is ridiculously low; it’s like free money. Some are even offering ten-year terms at 2.43 per cent. That’s insane.”

This has also peaked the interest of property owners to refinance, which in turn provides ample opportunity for brokers.

“Lately a lot of what I’ve been doing is refinancing anybody who has an apartment building because who knows when these rates will come around again,” Lee says. “When you’re talking multi-million dollar loan amounts, that sort of difference is always worth exploring because the monthly amount means huge savings. Even if there is a penalty to pay out it may only take a couple of years to justify [incurring the penalty]; it depends on the situation.”

With rates hitting record lows, take advantage of the opportunity. You can contact us with any questions you may have at (416)499-5454 ext 102 and we would be more than happy to help you with your financing needs.

You can read the full article by clicking here.

A Beacon Shines in the Commercial Mortgage Brokerage Industry

We are proud to announce that our very own Michel Durand has been nominated once again this year as the Best Commercial Mortgage Broker of the Year!!

Michel, is the President and principal broker of Mortgage Alliance Commercial Canada (MACC), as well as Co-Founder of Multi-Prêts Commercial (MPC). Both entities service commercial mortgage brokerage needs for clients across Canada. Michel has been in the commercial mortgage lending arena for over 25 years, 12 of which were with major Canadian financial institutions.

Michel’s vast experience in the commercial mortgage sector, and his dedication to improving the reputation of the brokerage industry provides him with a unique and clear perspective on the challenges as well as the opportunities that both borrowers and lenders face in today’s economic environment. He works tirelessly at keeping all participants in the commercial mortgage field informed of the current issues affecting borrowers as well as lenders in the industry to ensure that each is able to take advantage of the current market trends.

The Gala Awards Ceremony is sponsored by the Canadian Mortgage Professionals (CMP). The CMP recognizes and celebrates excellence across the entire spectrum of mortgage brokering. This annual black-tie gala is the event highlight of the year that attracts the biggest names in the business throughout Canada.

Should you have any commercial mortgage needs or simply wish to discuss a project, don’t hesitate to reach out to Michel or any of the team members at Mortgage Alliance Commercial Canada.