You probably think that the purpose of the pricing agreement is to protect you from the borrower who refuses to pay your commission at the time of closing. This happens occasionally, but not very often. When most commercial mortgages are preparing for closing, most borrowers are exhausted, impatient, and eager to close the deal. The borrower does not want to take the risk of restarting the four-month application process by appearing dishonorable before the lender. I teach a separate Mortgage Commercial Mortgage fee collection course for just $199, which comes with a typical fee arrangement. I strongly encourage you to follow this path. It can be a turning point in your career as a commercial mortgage broker. An important and painful lesson that almost all new commercial mortgage brokers have learned is to always require the borrower to have a signed fee agreement. Commercial borrowers are menting all the time. You are lamenting that the destination property is in the contract. They are lamenting that they have the money to pay the acomptt. They are lamenting about the purchase price. When refinancing, they tell great stories about the value of their commercial property.
They don`t have essential information about their past credit problems. They are lamenting, they are lamenting. If you have a fee agreement with them (a contract to arrange a business loan), you can sue them because they lied to you. The real reason you need a fee agreement is to protect yourself from (1) borrower fraud and (2) unjustified borrower terminations. You`ll learn just as quickly that commercial borrowers don`t appreciate the value of your time. You will work for hours. and resign on your part without sufficient legal reason. Your attitude is, « Everyone knows you don`t owe your mortgage broker any fees unless the deal is made. » Excuse me, but this is not one to four family loans used by themselves, with a personal, family or domestic purpose. Commercial loans are not subject to Reg Z.
There is no legal right of withdrawal. If you cancel a commercial mortgage, you still owe its fees to your commercial mortgage broker in many cases. I was so stripped of my commission as a commercial real estate agent that I studied law and became a lawyer. Imagine that you are going to study law with two children in childbirth. I`ve never missed a day of class. I gave letters. I graduated with distinction. I did all this because I was tired of being unscrewed from my Commission. I never practiced law in the traditional sense, but over the next six years, I sued more than 30 commercial borrowers who deceived me and my business.
I won almost every case. It is not innocent consumers that I have exploited. These guys were rich, dirty investors who thought they could get away with cheating on a poor mortgage broker. Thirty times, the court (specifically the arbitrator) accepted that they had indeed deceived us. You will learn this painful lesson one day. The only real question is whether you will learn this lesson after losing only five big commissions ($10,000+) or whether you have to lose fifteen big commissions before learning this lesson….