Hundreds of people become mortgage brokers every year. It’s one of those businesses (like real estate sales) where the barriers to entry are low and the rewards can be high.
All the new bodies bring lots of added competition, which is good for keeping existing agents on their toes. One area where competition is still scarce, however, is in the commercial segment. There are 12,000+ residential mortgage agents across Canada. Yet, commercial agents probably number in the hundreds.
Why? It’s because commercial financing is a tough nut to crack. There are no BDM’s to conveniently come by your office with new product and rate information. There’s a thousand different commercial deal types and combinations. Closing cycles are measured in months instead of weeks. Closing ratios are significantly less (i.e. fewer commercial deals close). Pay is far less certain. The required knowledge is highly specialized. Deals come mostly by referral (advertising often isn’t as effective as with residential clients). Etc. Etc.
Moreover, there are very few places for commercial brokers to cut their teeth. There are virtually no commercial mortgage courses in Canada (if someone knows a reputable one let us know and we’ll post it). There’s also very few firms that hire and train new commercial brokers off the street.
What this all means is that the ranks of commercial brokers will likely be dominated by seasoned pro’s for the foreseeable future. In addition, the top 20% of commercial brokers will probably continue to generate 80% of the volume. If you’re a broker looking to enter this part of the market, the best advice might be to start small (where mistakes are less costly), choose a commercial niche, and master that niche’s financing processes, underwriting standards, and terminology.
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