Shattered relationships: Brokers speak out

Shattered relationships: Brokers speak out

The relationships between brokers and lenders are crucial but there are certain problems which can make them tough to maintain….

The relationships between brokers and lenders are crucial but there are certain problems which can make them tough to maintain.

B&C decided to contact both brokers and lenders to find out what makes a good relationship, what can cause a breakdown in relationship and how can a borrower be affected by a broken relationship between a lender and a broker?

Zed Logart of brokerage JM Financial felt although it sounded simple, honesty and transparency was the key for forming a good relationship with a lender.

“Rather than attempt to make something fit, it is always better to display a whole and true picture, and fine tune a solution, even though sometimes brokers may feel that they are hindering a case,” said Zed.

“Transparency is the best solution to build solid lasting relations.”

Chief Executive of Regentsmead, James Bloom, agreed  it was vital for there to be complete honesty and transparency in a transaction where both parties were looking out for the best interests of the borrower, as well as their own.

“For Regentsmead as a very knowledgeable development lender we need a broker who knows his client and the project and can therefore provide a warts and all summary of the proposed transaction,” said James.

“Providing both parties are acting in good faith and communicating well this should lead to a good relationship.”

As well as honesty and transparency, Bob Sturges of Omni Capital said there must be a synergy that enabled both parties to derive commercial benefit from the relationship.

“Individuals might get on swimmingly on a personal level, but if their business objectives are not aligned then no meaningful business relationship can exist,” said Bob.

“Next, I'd cite communication. This can take many forms, but in its purest sense it's simply about understanding one another.

“It sounds basic, but the history books are littered with examples of relationships shattered on the anvil of misunderstanding.”

When asked what had caused these ‘shattered relationships’ Bob felt disappointment was the most common cause of a breakdown in relationship.

“Darker reasons present themselves from time to time, but parties usually fall out because of a shortfall in expectations. This is why communicating properly is so important,” said Bob.

While Zed said the common causes were usually a lender or a broker thinking in the short term rather than trying to learn from each other.

“Common causes are usually a lender or a broker thinking short term or basing ill judgement on one or two negative factors over the odd case, instead of trying to learn from one another and grow a relationship which, given the right ingredients and volumes of work will inevitably be positive and profitable for all,” said Zed.

James however cited dishonesty as the most common cause on either part.

“Either a broker not portraying the correct facts because they just want to get a deal through or a lender who is not honest about their intentions on the project, giving a slow and painful no is often a major cause of concern for brokers and their clients and at Regentsmead we never do that.”

Finally, we asked whether a borrower could miss out on the best rates if there was a bad relationship between a broker and a lender.

“No, the broker will most likely use another lender – the choice is huge,” said Stephen Burns of Adapt Finance.

But Zed said: “A borrower may miss out on actually achieving a loan solution itself due to breakdown in communications between a lender and a broker.”

James though believed it depended on how well the borrower researched the market but a good broker could play their part.

“However a good broker will not only be looking at rates for their client but more importantly ensuring they are matched to the right lender for them who may focus more on speed or service if that is important to the client.”

While Bob agreed concluding: “Good brokers will always strive to seek the best financial outcome, although this might not necessarily mean getting the cheapest deal rate-wise.

“If a broker's relationship with a lender is so fractured as to prevent this happening then it's no relationship worth having.

“But there are plenty of good lenders from which to choose.”

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