A guide to the various titles and nuances of professionals who arrange commercial financing for a fee.
There are a lot of commercial real estate investors, and they borrow money against their properties.
There are also a lot of commercial real estate lenders with different loan programs and parameters.
Often, there’s a professional in the middle who, based on their full time focus in the real estate capital markets, can play matchmaker to the advantage of both parties. They often advise the borrower on underwriting and deal structure, create a financing request package to speed the offer process, and help negotiate the financing. For their trouble, they collect a financing success fee as part of the closing.
What do you call this person?
It turns out there’s not a single, consistent answer.
This is the industry default title. “Mortgage Broker” is the industry norm for someone who can help you shop for a residential mortgage, so slapping on “Commercial” here draws the parallel while also making the distinction. Every title on this list is basically an offshoot of the traditional Commercial Mortgage Broker position.
This group of professionals is basically the same as the Commercial Mortgage Broker, but they don’t like people saying so. They may correct you in a conversation if you call them a broker. There’s a distinction here that a “Banker” usually offers loan servicing in addition to origination. That means, if you take a loan they arrange from certain capital sources, rather than interacting directly with that capital source to make payments, etc, you are still going back through the Mortgage Banker. They take a small fee from the lender on each loan payment for that service of managing the loan. You’ll also hear them say their capital relationships are Correspondent relationships when they have servicing rights.
Investment Banker is a tricky title, because it can mean two or three different things when it comes to real estate. Of course, investment banking connotes more than just arranging loans, but there are some in our industry that call themselves a “Real Estate Investment Banker”, when, in practice, they simply operate like a Commercial Mortgage Broker but want to sound fancy.
You won’t see a ton of people with this title. It’s not sexy. But man is it simple.
This is the title we use at StackSource for the professionals that help real estate investors find their way to the best financing. The idea is that we are not simply making introductions or blasting out loan packages to a list, but that the team helps guide the borrower on how different lenders are going to view their deal, advise on different structures available, and helps negotiate the best financing package to optimize the borrower’s investment returns on the deal.
Originator would connote the opposite of Capital Advisor. They are there to put loan offers out to reel in business. Many industry professionals consider the sales/business development process to be what constitutes “origination”, and would use this title as a counterpoint to “analyst” or “underwriter”. The “Originator” title is more common for direct lenders but it is in use by intermediaries in a few instances.
Like a Capital Advisor, but more explicitly focused not only on lending/debt options, but in putting together multiple tranches of capital from senior debt (typical commercial mortgages are considered “senior” in the capital stack), to mezzanine debt, to different equity structures. The further up the capital stack you go (towards Equity), the less this is a science and the more it is an art.
This is one of the worst parts of our industry. There are brokers out there that call themselves something that makes them sound like a direct lender. Many of these guys (almost always men, in my experience) will actually offer a “term sheet”, again making themselves look like a lender, but there’s no captive capital behind the offer. They only then turn their attention to backfilling that loan offer once the borrower has signed (and probably paid a deposit!). Brokers acting like lenders is scummy, and unfortunately all too common.
For our ecosystem at least, when we catch a broker pretending they are a direct lender, we pull out the ban hammer. The list of the few dozen “lenders” we won’t work with at StackSource is probably worth even more than the list of hundreds we do.
There are people that perform versions of this role that honestly, do not have a clear title. At some big companies you’ll simply see “level” titles, like Senior Vice President or Managing Director, without further context, and it’s hard to tell what they do before talking to them. Other times you’ll see “Capital Markets” thrown around, but that can be ambiguous in our industry as well, as certain companies consider Investment Sales part of a Capital Markets group.