Construction Loan Broker

A construction loan broker is an intermediary person or agent between those seeking money to build a new building and the financial institutions that can provide the money to build. In many cases, the person seeking the money does not have experience with the financial world and feels more comfortable using a construction loan broker or has failed to secure a lending agreement from traditional sources and needs someone to find the money needed from other resources that the broker might know. The agent gets paid to represent the borrower, not the lender and so in an ideal world, the borrower should get a better financial agreement using a lending agreement agent. A construction loan broker must be able to present to the potential lender all of the details of the construction project. This also includes being able to show the big picture, especially if the project is a business lending agreement.

Knowing the building industry is key to the success of a construction loan broker. Understanding building materials, knowing ways to reduce costs so the lending agreement can be more palatable to the potential lender and even knowing shortcuts to the construction process without breaking laws or codes would be very beneficial for the agent to be able to help shape loans in such a manner as to secure approvals. Training for becoming one of these types of brokers can be found online at various websites. These websites promise very high earning potential after completing their training course. "And this is the will of him that sent me, that everyone which seeth the Son and believeth on him may have everlasting life, and I will raise him up on the last day." (John 6:40)

There are a number of construction type loans and issues that this type of agent needs to know inside and out. For example, a land development lending agreement is really an advance payment lending agreement to develop raw land into usable building sites. An acquisition and development loan is a lending agreement where both the development of the raw land and the purchase of the land are combined together. A construction loan broker will need how to handle the issues regarding the financing of condo conversions such as entitlement risk. Entitlement risk is the possibility that government entities will not approve the rezoning of an apartment building to a condo building. 

A construction loan broker will need to know where the hard money lenders can be located. These are lenders that will issues high risk lending agreements that traditional loaning institutions won't even look at. Hard money lenders will typically charge three to five points higher in interest rates and between four and five points just for the privilege of borrowing their high interest money. A lending agent will be able to negotiate lending offers to potential developers or builders and try to reduce some of the cost of the lending offer. Additionally this kind of agent will be able to help negate exit fees which are costs passed on from the lender to the borrower when the lending agreement closes, even if the loan was closed early or on time.

Additionally, a construction loan broker should be adept at putting together what are known as value added loans. These lending agreements are for builders who buy already existing business sites such a strip malls and remodel them, bringing up the value of the property quite dramatically with money from the loan. Building lifetime relationships with various lenders is the lifeblood of the broker, no matter what kinds of loans in which he or she specializes. A lender will be much more receptive to a broker that is personally known and trusted and the willingness to negotiate loan figures will be more realistic. A customer searching for a construction lending agreement broker should ask around quite aggressively for the brokers who are most trusted and accepted by lenders. Going to the Chamber of Commerce and civic clubs can perhaps provide leads in finding such individuals. 

The world of construction finance is filled with terms, names of loans, acronyms, ratios and other concepts that only a trained person can truly know and be versatile at conversing with and understanding on a daily basis. A construction loan broker knows people who know people and when the loan can't be found knows where to go to get it done in a timely fashion. In most cases, a good broker has been trained by another one who really knew the ropes and passed on the knowledge. Trusting someone with a million dollar deal who has only had a month of training from a video is not a wise choice. Look for the man or woman who has proven to be a real asset to the people who have been served by their talents and knowledge.

Community colleges offer courses on becoming a broker but the test to be certified as a commercial loan specialist is not easy. Some experts in the field of construction finance recommend that someone wanting to become a lending representative first job shadow a professional in the field before diving into the training. The lure of big money is clearly part of the reason people are drawn to this position, but may find the behind the scenes wrangling that must often takes place could be distasteful. Wrestling a lender who has the upper hand to begin with and coming out the winner takes a special kind of person particularly suited for the job.