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Over the years I’ve dealt with a lot of brokers.  Some brokers were knowledgeable and could give me the information I needed to quickly tell if it was a deal worth funding or not.  Unfortunately that was a rarity rather than the norm.

Most brokers would tell me to “think outside the box” to get this deal funded.  My response, “The numbers are the numbers, that’s it”. I would get calls from other “lenders” wanting to cross a trade (in essence be the middle man between the borrower and the lender).  To make sure they were an actual lender and not just another broker, these were the top questions I asked:

• How many deals have you closed this year? How does that compare to last year?
• Can I take a look at your last three deals that you funded? (If they don’t provide specific deals, give me general terms (location, asset type, points, terms, etc).
• Can you give me three references from borrowers/owners that you’ve done business with in the past six months?
• Why are you passing on this deal?
• How long have you been shopping it around?  What has been the feedback from other lenders?

Why does this matter? You want to know whom you’re dealing with. The expectations differ with a lender than dealing with a broker.  Brokers are needy and don’t usually give you a direct, up-front answers the first time you ask them something.  Brokers want to immediately know “how much will I get paid?” and “when will it close?”  Granted those are viable questions to ask, though the deal is more important in the preliminary stage rather than how much money you may make off the deal.  That’s like me going to Morton’s Steakhouse and asking for dessert and then I’ll consider making a reservation for dinner tonight.  It just doesn’t make sense.

If you’re dealing with a broker, that’s fine.  Know it up-front and immediately set the expectation level on how often you will communicate and preferred method to communicate (email, phone).  Make sure the broker is direct with the borrower.  If they are not, don’t even try to work the deal.

If you are the broker, looking to place a deal with a hard money lender or non-traditional bank, make sure you qualify them so that you don’t waste your time.  Make sure you ask the questions above and include the following:

• Get up front their requirements to submit a loan.
• Find out how long is the review period.
• Will they work with outside brokers?
• Are you the direct funding source? Is your company actively lending on commercial deals?