How much more analytical do you need to be a mortgage broker vs an investment sales broker?
How much more analytical do you need to be a mortgage broker vs an investment sales broker? Is there a significant difference? Thanks
Two different skill sets, but the premise of being sales/client oriented is the same. The deal flow is different as well. With financing, you'll be cranking out more deals faster, as it's much easier to get a lender to make a loan than to convince an equity investor to risk their capital. I would say the biggest things that make financing more difficult are 1) generally you'll be doing many different product types whereas in IS you might do 1-2. And 2) You have to be able to look at deals wearing many different hats (Lender, GP, LP, etc.). Hope this helps.
what is your end goal ?
It depends. Generally speaking most people will assume/agree that debt and equity guys are more "financey". Is this really the case? Maybe. I think each type of broker caters their presentation and product to their audience (buyer vs. lender).
A debt broker at Eastdil in LA is probably more analytical than a single-tenant net leased broker at Marcus & Millichap in Dallas. But an institutional office investment sales broker in NYC is generally more analytical than some guy at a small CRE mortgage bank in Seattle.
There are astute advisors who are thorough and analytical on both sides of the fence so I don't want to generalize. But what I will say is that too often acquisitions or credit guys dismiss brokers as "idiots" or not analytical (don't get m wrong....there are DEFINITELY idiots in this business) because of robust assumptions or pricing on deals.
I think it's easy for guys in those roles who are deploying capital to forget that that brokerage is a HUGE balancing act between your client's expectations and market realities. Both types of broker's have to bloat assumptions and pricing or loan sizing because if they don't they will usually loose the business to someone else who is willing to stretch for the client.
Often times, your "dumb broker" had to reprice or resize a deal for more proceeds because of the client's expectations. In the case that he/she doesn't? They go with the broker who says they're going to get more proceeds or 25 more bps of cap rate compression.... and the worst part is that it will usually trade and get priced at the initial guidance.
That being said, you have put your knee pads on and let the market adjust the client's expectations.Trust me they don't want to do this. They want to meet the market and get paid but they have to advocate for the best price and terms per their client's request. It's your job as a broker to push pricing and try to set the market every time.
Source: Used to work for a top-producing investment sales team and have since gotten into the debt game.
Hope that helps.
This is spot on. To your point of us brokers being considered idiots - we know what we're presenting, but it doesn't mean we're drinking our own kool-aid. We underwrite things very differently internally vs. what is presented in offering materials - this is just what the market/clients forces us to do despite how much we resent doing it.
Great post. I understand the need to balance winning business with the market realities. Do you think this practice erodes trust in brokers? Does the buy side just take everything brokers say with a grain of salt?
It all depends on the broker. Most seasoned guys know which brokers are yokels and which are trustworthy (this applies at both the individual as well as shop level). At our shop we like to be upfront with all the hair and we never lie to capital sources, because there is no point. Everything comes out during DD/closing anyway. As for the projections, in my opinion everyone should be taking everyone's projections and market data with a grain of salt until they do their own research. Just because a potential equity partner with a deal comes to you directly instead of through a broker doesn't mean their numbers are any more trustworthy. Of course, in all cases, your reputation follows you regardless of what side of the table you're on and trust is the most essential key for successful transactions from what i've seen so far.
Right. I'm talking also with pitching a sale for example. If you tell the client the building will sell for $100M, but you know internally it won't sell for more than $90M and then the market only gets to $85M. Is that common, expected practice?
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