From Real Estate Agent to Commercial Mortgage Broker: How to Add Loan Brokering

A real estate agent can become a commercial mortgage broker without starting over, because the hardest asset to build in loan brokering is the one agents already have: relationships with people who buy, sell and own property. What is new is the underwriting side of the business, a different set of counterparties in lenders, and a licensing and disclosure question that needs answering before you take a fee.

What Transfers From Real Estate Sales

• Clients. Every buyer needs financing, and every owner will refinance. You already know them.
• Property knowledge. You understand leases, tenant quality, submarkets and what a property is worth.
• Reading financials. Agents who sell investment property already work with rent rolls, operating statements and cap rates.
• Deal management. Keeping a transaction on schedule across several parties is the same skill.
• Referral partners. Attorneys, accountants, inspectors and other agents are also sources of loan requests.

What Is New

The shift in thinking is from value to cash flow coverage. A lender cares less about what a buyer would pay and more about whether the property's net operating income comfortably covers the loan payments. The DSCR calculator and LTV calculator make it easy to see which limit caps the loan on a given deal.

Licensing and Disclosure: Sort This Out First

Three separate questions apply.

Does Your State License Commercial Loan Brokering?

Most states do not require a license to arrange loans on non-owner-occupied commercial property. Some do, through a mortgage broker license, a real estate broker license or a registration. The licensing by state guide is the starting point, and the state regulator is the final word.

What Does Your Sponsoring Broker Allow?

If you are a salesperson working under a broker, your independent contractor agreement or office policy may limit outside business activity, require that fees run through the brokerage, or prohibit loan brokering altogether. Ask before you start. Some brokerages welcome it and will set up a financing arm; others will not.

Can You Act on Both Sides of the Same Deal?

Earning a sales commission and a loan fee on one transaction is a conflict of interest. Where it is permitted, it requires clear written disclosure and the client's consent. Many agents avoid the issue at first by arranging financing only on deals where they are not the sales agent, or by referring the loan to a mortgage broker in exchange for a referral fee where that is allowed.

Three Ways to Add Financing to Your Business

Most agents move through these in order. The co-brokering guide explains how fee splits and agreements usually work.

What to Learn, in Order

1. Loan sizing. NOI, DSCR, LTV and debt yield. This takes a few weeks.
2. Loan products. Which deals fit bank, agency, CMBS, SBA, bridge and life company loans. See the loan products guide.
3. Loan packaging. How to present a deal so a lender can underwrite it. See structuring a deal package.
4. The closing process. Third-party reports, lender conditions and realistic timelines. See commercial loan timelines.

The full learning plan is in commercial loan broker training.

Where the First Deals Come From

• Your own buyers. Any client under contract on an investment property needs a loan.
• Past clients. Owners with loans maturing in the next 12 to 24 months are refinance candidates. Ask when their current loan comes due.
• Other agents. Agents who do not want to handle financing will refer it to a colleague they trust.
• Residential clients with investment property. Many homeowners own a small apartment building or a commercial unit.

Common Mistakes Agents Make

• Quoting terms before sizing the loan. Run the numbers before telling a client what they can borrow.
• Sending one lender. The value of a broker is comparison. Take the deal to several lenders that fit.
• Using the offering memorandum as the loan package. Lenders want trailing financials and borrower information, not marketing copy.
• Skipping the fee agreement. Get it signed before you start work. See broker fee structures.
• Underestimating the timeline. A commercial loan commonly takes 45 to 120 days or more to close, which affects contract dates.

Switching Entirely

Some agents find they prefer financing and move to it full time. The economics and steps are in how to become a commercial mortgage broker and how to start a commercial loan brokerage.

Where Janover Pro Fits

Agents have the clients. What they usually lack is a lender list. Janover Pro lets you search commercial lenders by property type, loan size and location and contact originators directly, so you can take a client's financing to lenders that fit without spending years building the relationships first.

Frequently Asked Questions