While sales of large commercial properties in major markets are slowing, smaller commercial properties in smaller markets are seeing an increase. According to a National Association of Realtors (NAR) survey of Realtors, sales of commercial properties valued under $2.5 million rose in the third quarter of 2016.
The sales volume for the quarter increased 11%, exceeding the 8.5% year-over-year gains reported in the first and second quarters, according to NAR. Investors have turned their attention to secondary markets as the price of commercial real estate in major markets has increased.
All of this presents an opportunity for brokers considering closing small-balance commercial mortgages. With this increase in activity, there will be more borrowers seeking financing to purchase small commercial properties, and many will want the assistance of commercial mortgage brokers.
Here’s how you can get started closing these loans:
Connect with lenders.
First, make sure you contact small-balance commercial mortgage lenders and build a business relationship with them. Develop an understanding of the products that they offer so that you can place your borrowers with the right lender.
Reach out to borrowers.
Let potential customers know you can finance their commercial property purchases through your website, social media channels, emails and phone calls. Contact your current referral network and let them know that you can help their borrowers who are looking to purchase small commercial real estate.
Collect the necessary documents.
Talk to your lenders and ask what they need to look at a commercial mortgage scenario. Generally, a completed application, a tri-merge credit report, a loan submission summary and an agreement of sale are the primary documents needed when a lender is evaluating a financing request, so focus on obtaining those first.
The small-balance commercial mortgage industry is full of possibility for enterprising brokers looking to expand their product offerings. Taking advantage of the opportunity the small commercial real estate market presents is a simple way to close more loans and earn more income.