Hi, My Name is Don and I’m a Broker…

I really appreciated Admin’s recent post about people pretending to be what they’re not. “If you’re a broker, say you’re a broker!” I believe he said. I agree, but at same time my thought was: “Um, I’m proud to call myself a broker,” and I’ll tell you why:

Direct vs Indirect (Broker)

Part of the confusion comes from these two terms and what they mean. For some reason that has led to a belief that perhaps one is “better” than the other, when nothing could be further from the truth, they simply occupy different roles.

Reputable direct lenders do what they do very well. They have excellent financial products that help capitalize many good enterprises. Someone working at the “business-getting” level of a direct lender- i.e., the folks posting on this site- will, in their travels, encounter businesses they CAN’T fund, for whatever reason. A smart lender in this case, would of course have a resource to refer that client to- that’s basic networking. But for the direct lender, that’s pretty much the end of it, correct? (I’m going to gain the ire of many a direct lender- that’s ok, I realize I’m oversimplifying and I welcome a rebuttal by any good direct lender who wishes to take issue. It's ok, this town is big enough for the both of us.My point, ultimately is this:)

What does a broker do?

Simple:

  1. A good broker provides many legitimate resources for funding good projects and enterprises.

  2. A good broker works to increase your chances of successfully funding your project or enterprise.

The second part is key. I'll explain:

What Every Lender/Investor Wished the Client Knew

You’re competing for their money. Period.

When you develop an idea and submit it to the funding arena, there are more deals than yours on their desk. This is as true for the direct lender as for anyone else. Many funding requests happen, many get turned down.

So-

As a broker, I often find myself in the role of helping a client to understand what the missing pieces are in that case. Frequently I find that their business plan needs refinement to attract legitimate interest. Or perhaps their approach needs to be restructured so that their plan can be funded in stages. Sometimes a good broker will help the client prepare a strategy to increase his credit-worthiness and ability to acquire income-producing assets in the future.

A good broker may wear many hats to help a business reach it’s goals.

A good “Commercial Finance Consultant” - which I guess is my official title- will not only have resources for legitimate, competitively priced funding options, but will ALSO know how to roll up his sleeves and go to work.

The borrower should understand that a good broker may put them to work as well. Which is also ok – it's YOUR business you want funded, right? Part of a small business owners responsibility is to do the work to put himself in a position to succeed.

But at the same time, a good Commercial Finance Consultant (since I've rolled out the term) will help you with that.

I'm working with a gentleman who is looking to fund what could be some profitable real estate deals. He has many of the pieces in place, but not all. I think he'll get there. But his executive summary is terrible! So, what do you do – because let's be very, very real here- the executive summary is analogous to a resume for a job. You're applying for the position of “Spender of Your Money, Mr. Lender.” It's a basic step. Presentation matters. Yes, neatness counts.

So, I'll clean up his Executive Summary, he'll work on his part and we'll likely do business together.

It's fun to do.

Lastly,

Watch out for “brokers” who:

This is my advice:

  1. Steer clear of ANYONE who asks upfront fees to process your funding request. While their may be some legitimate out-of-pocket costs for things like appraisals or credit reports, I’m not aware of a legitimate lender/investor who will ask for money in their pocket in order to go to work for you.

Ultimately, a “good broker” gets paid for one thing, and one thing only: Successfully funding deals.

  1. Carefully assess the costs of any loan offer and don’t allow yourself to be pressured into signing something or agreeing to something that doesn’t make business sense. This is not to say that a relatively high-cost product isn’t appropriate- every case is different. I’m simply advising buyers to be wise and aware. If the capital and its cost will make you more money, then by all means, go forward. But if you get to the closing table and it’s not right? Walk away.

Our policy is: If it makes business sense to the client then we’d expect to move forward. And if it doesn’t, then why in the world would we ask them to?

  1. Avoid any “lender” who responds to your funding request like this:

    Example: Someone posts something like –

    “Need funding for X number of Y type of property/project/whatever...”

Then follow multiple comments that have no relation whatsoever to the funding request posted! If this site is to succeed, then the people who participate as funding sources – direct, broker or whatever – have a responsibility to do the work, indeed the due diligence, to do good business. If someone isn't willing to at LEAST do the research to review the request, assess if it might be a good fit, learn about the borrow, get a phone number... What effort will they likely put into your project? They make a blind response to a request they haven't read? Unhelpful responses don't do anybody any good. Please stop, those of you who are doing that. The SFR buyer doesn't really care about your fresh cut BG's. It's almost to the point of content spam with some.

This site can and will be the standard for where good business people go to find good business funding. But it's going to depend, in large measure, on the quality of funding sources available from those of us on the finance side. Let's put an end to the debate. Let's all do what we all do best and refer the rest.

Network. Serve the client. Do it.

I’m Don Green, and I’m a “broker.”

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Comment by Forest Tardibuono on August 20, 2014 at 9:15am

Good blog Don.  I've been a licensed California Broker since 1988 and dealt with Hard Money/Private Money loans since 1990, here in Northern CA.  I am licensed NMLS and California BRE license and pride myself on regular training to keep up with the regulations - to help protect Borrowers and Investors.  Unfortunately there are scammers out there but heck, I think it's always been this way and legitimate Lenders, such as ourselves, just have to spread the word best as we can.  Borrowers will [unofrutnately] "live and learn" if they do pay upfront fees and try and go with the cheapest Lender on the block - which ultimately costs them more in the long run as those Lenders most likely won't be upfront with them about all the fees, etc. 

I suggest finding someone who is local, has a decent website and you can find background testimonials on the person and especially find out how long they've been in business.  They will have factual statistics to prove they are legitimate if they are in fact so.  Word of mouth is the best for a business and good Brokers and Lenders have good word of mouth. 

Best, Forest - The Guy in the White Hat

www.sunpacmortgage.com

Comment by Denise Josephs on August 13, 2014 at 12:44pm

Hi Don,
Most Importantly, my namd is Denise Josephs and not Diane Josephs :). Don I did speak of what of I do as Financier, I will copy and paste the paragraph in my initial response.

Here it is: Don, In my function as a Financier I solve the problems for people who need Capital, whether it is the needs of Direct Lenders( Hard Money Lenders or Private Money Lenders) who need Capital to Fund loans-- because their challenge is not enough Capital and Liquidity to lend, as well as fund projects for brokers who have clients that need funding and last but not least will fund projects directly for the borrower.

In Addition to that, here is a more simplified, general definition from Google's Wikipedia definition of a Financier:

A financier is a person who makes their living from investments, typically
involving large sums of money and usually involving private equity and venture
capital, ...

Don, ultimately, my goal in my comment was not to create a Platform for my Value Added Services as a Financier, that I will address in my Own Blog Post that I will be writing tomorrow on this Real Estate Finance, it was just to get clarity on "Direct vs Indirect Broker" because I truly need to understand what the difference was between the two and thier roles and functions. It was just that simple!!

Comment by Don Green on August 13, 2014 at 12:14pm

Hello All, O.P. here,

 

First, thanks to Admin for sharing my post with a broad audience. The response has been overwhelming and positive!

Second, to Diane Josephs – Your critique of my writing is both well-taken and indeed seconded by my Father who has made his living as a Writer and Editor since, well, since before I was born, anyway. If I had submitted this for his approval, it would no doubt have come back to me with big red marks and lots of margin notes! The section you mention in particular was pretty weak… In spite of that, I decided to go ahead and post it and err on the side of timing due to a recent Admin post.

So, to that end, allow me to clarify by going to the ultimate purpose of that post:

This particular website (and any other forum, association, networking group, etc.) depends on two things to be successful:

 

1)     It must attract and retain legitimate funding inquiries from qualified business people.

2)     It must be a legitimate source for those people to connect with genuine funding sources (and ancillary services, perhaps).

It’s really that simple.

That post had yet another purpose, which was to elicit discussion among various professionals within the finance industry. Opening a discussion here about what each of us do best and how we can mutually benefit the client(s) is also a key factor in making this an online financing community. That’s going to happen when, if and because the potential clients who seek funding here find real solutions.

Again, it’s just that simple.

I provide certain solutions to business owners seeking funding. So do many of you. I’ve discovered a number of finance professionals on this site I’d be glad to do business with. I’ve discovered serious-minded folks who are ready to do business and we’ve helped them move forward (in my business that means we got them some money).

Diane, you mention in your response that you’re a financier, which is far different than either a direct lender OR a broker. Yet (if I may return the writing compliment) you don’t fully explain what specifically differentiates our roles. Please explain further! 

At the same time- part of what I hope to accomplish IS a discussion about that. By all means, Diane, tell us what you do. I encourage that from anyone serious. Give us your value proposition. Any or all readers of this - express your value proposition! Let's hear it! I kind of gave you mine...

Should that be it’s own topic?

Comment by Denise Josephs on August 13, 2014 at 9:27am

Good Morning, Don Green:

I Am a Financier, which is quite different from a Lender or a Broker. I have decided to address your article only because it came directly into my email box, as a Matter of Fact I have not visited this website in over 6 months, but your article intrigued me to, because I felt a need to address your post just to clarify some points you made.

Don, In my function as a Financier I solve the problems for people who need Capital, whether it is the needs of  Direct Lenders( Hard Money Lenders or Private Money Lenders) who need Capital to Fund loans-- because their challenge is not enough Capital and Liquidity to lend, as well as fund projects for brokers who have clients that need funding and  last but not least will fund projects directly for the borrower.

I will commend you on writing the article, but I was a bit confused as to your paragraph 2

I Am addressing your second paragraph titled: Direct vs Indirect (Broker) Don, you never gave a definition to what a Direct Broker is as opposed to an Indirect Broker and what each one's specific role is.

In addition to that, the very next paragraph spoke of Direct Lenders and what they do without ever completing your thought on what a Direct Vs Indirect (Broker does).  Then in the Fourth paragraph you addressed what a "Good Broker Does", still not addressing what a Direct Broker is as opposed to an Indirect Broker and what the difference is in their roles.

Don, Your writing was not consistent in thought and did not have the flow of addressing what a "Direct Broker vs an Indirect Broker does" .  In summation, the article was a bit confusing and a reader could mistakeably interchange the role of a Broker as being a Lender and still would not get an understanding of the role and the responsibilities of a "Direct Broker vs an Indirect Broker"  I would love to know the difference.

Comment by Diane Charles on August 13, 2014 at 7:11am

Don,

I agree, well said.  Too many people blame the broker or lender when they don't receive funding. Learn the business, learn how financing can be completed before blaming others.  Do your own due diligence and your own research.

Diane

Comment by Mike wojciechowski on August 13, 2014 at 4:11am

Don I just want to say I think that your point is very well said and true. We work with both direct lenders and brokers and there is a time that both are essential and well appreciated as you have pointed out.

The bottom line is finding trustworthy people in all capacities so you can build a outstanding team and that will certainly lead to success! Thank you for your post.

Respectfully,

Joan

Comment by Admin on August 12, 2014 at 10:09pm

One of the best posts on this or any mortgage website. We need more Brokers like Don Green.

Admin

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